OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.76

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 3.10

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 3.80

Market Compass

02 October 2013~ Good Morning Singapore!

Singapore Idea Snippets:

02 Oct 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 : Our greatest glory is not in never falling, but in rising every time we fall. - CONFUCIUS Singapore: The Day Ahead SINGAPORE DAYBOOK :Debt servicing rule dents prices, volumes Q3 private property prices up 0.4% but certain segments show decline: URA flash estimates [SINGAPORE] The Total Debt Servicing Ratio (TDSR) framework has made its presence felt, crimping prices and volumes in pocket segments of the private and public residential markets. Prices of Singapore's private homes rose a marginal 0.4 per cent in Q3, according to the Urban Redevelopment Authority's (URA) flash estimate, compared with the one per cent gain seen in the previous quarter. Specifically, prices of non-landed homes in the Core Central Region (CCR) slipped 0.5 per cent in Q3, compared with a 0.2 per cent dip the previous quarter. In a similar vein, prices of city-fringe homes dropped 1.1 per cent, reversing a 0.2 per cent rise in Q2. This is the first decrease since the first quarter of last year. "The third quarter's price changes are significant in that two market segments, that is, CCR and Rest of Central Region (RCR) posted price declines simultaneously. As these two segments rely more on investor demand, this group of buyers has been affected more significantly by all the cooling measures in place, including the TDSR curbs," said Ong Teck Hui, national director, research and consultancy, at Jones Lang LaSalle. But the prices of city-fringe homes might register a larger drop when the finalised index is released, given that the preliminary numbers are based on caveats lodged during the first 10 weeks of the quarter, said Desmond Sim, associate director, CBRE Research. "CBRE expects that when the transactions from recent new launches such as Thomson Three and Sky Vue have been included, the final Q3 2013 islandwide price index might turn out to be the same level as the Q2 2013 index," he said. Lowering price expectations in light of the new curbs on housing loans has been one way developers have tried to overcome the slower sales momentum, said Chia Siew Chuin, director of research and advisory at Colliers International. Some developers have also opened showflats a couple of weeks before sales bookings begin to allow potential homebuyers time to obtain approval for housing loans. That being said, transaction volumes have dropped across all market segments. According to data provided by Knight Frank Singapore, total volume in the CCR and RCR fell 61 per cent and 72 per cent quarter-on-quarter. In the Outside Central Region (OCR), where mass market homes are located, transaction volumes fell 50 per cent quarter-on-quarter. While prices in the OCR rose in Q3, the increase of 2.1 per cent was overshadowed by the 3.8 per cent gain seen in Q2. According to Knight Frank, average prices of new sale private non-landed homes in the OCR was around $1,332 psf in Q3, compared with $1,096 in Q2. Looking ahead, Mr Ong said that he expects the OCR price increase to continue moderating over the next few quarters, while CCR and RCR prices could show a gradual softening trend. He noted: "Year-to-date, OCR prices have risen 7.4 per cent while CCR and RCR prices are practically flat. The vulnerability of CCR and RCR is more apparent since over the last seven quarters, CCR had three quarters of price dips while RCR had two." Said Nicholas Mak, executive director, research and consultancy department at SLP International: "For the whole of 2013, the private residential property price index is projected to increase by 1-3 per cent year-on-year. The price index for CCR and RCR could register a 0 to -2 per cent year-on-year change. For non-landed properties located in the OCR, the price index is likely to increase 7-9 per cent year-on-year," he said. Indeed, the sustained interest in mass market homes is partially supported by the introduction of another group of buyers, mainly the newly minted Singapore permanent residents who have to wait out three years before they can buy resale HDB flats, said Eugene Lim, key executive officer at ERA Singapore. This has resulted in those with sufficient funds purchasing suburban homes instead of waiting to buy a resale HDB flat, he said. That being said, the projected weaker resale prices of HDB flats ahead could affect the affordability of the upgrader's segment of the private residential market, pointed out Ms Chia. "All things considered and barring any unforeseen shocks, overall private residential home prices are expected to flat line in Q4 and register a mild increase for the whole of 2013," she said. (Source: The Business Times) MARKET SCOOP StanChart Pte Bank open to acquisitions for growth SGX queries Blumont on share price spike Threadneedle beefs up Asian equities team with new hires in S'pore S'pore Reits highly leveraged, face refinancing risk: Fitch HDB Resale Price Index falls for first time since 1Q 2009 SGX codifies rule on share buy-back limit Vallianz to buy 50% of Saudi marine support firm from Swiber STATS ChipPAC gets US$19.6m insurance recovery for Thai flood (Source: The Business Times) OCBC Securities says... NOBLE GROUP | SELL | TP: S$0.76 Noble Group (Noble) has announced that it has agreed to invest in a newly established private mining venture - X2 Resources - where Noble, X2, TPG will each put in US$500m The move is to create a new mid-tier diversified mining and metals group by leveraging the extensive track record of the X2 Team in identifying and acquiring assets/businesses at an opportune time in the cycle and applying their proven approach to integration and value enhancement to the resulting portfolio of operations Under the agreement, Noble will be X2 Resources' preferred marketer and provider of supply chain management (SCM) and logistics services According to management, the investment is consistent with Noble's previously communicated strategy of primarily focusing on its core competence as a supply chain manager, rather than a producer of natural resources Management also believes that the relationship with X2 will open opportunities for Noble to provide energy, manage X2's freight requirements and risk-manage the supply chain for example While we do see benefits from the investment, we note that most will need some time to flow through i.e. more medium to long term in nature Hence, we will not be making any adjustments to our forecasts (we have already previously cut FY13 earnings estimate by 43% after a dismal 1H showing) But for now, we believe that headwinds could continue to come from the sluggish economy in China We further expect its Agriculture segment to remain a drag on its overall profitability Separately, the potential shutdown in Washington could also weigh on sentiment As such, we maintain our SELL rating and S$0.76 fair value We would be buyers below S$0.80 (recent low was S$0.785) DBS Securities says ... EZION HOLDINGS LTD | BUY | TP: S$3.10 Ezion is proposing to inject its marine supply base asset into Ocean Sky at cost via a share swap Post exercise, Ezion will hold 45.15% in Ocean Sky while the latter will have a 2% stake in Ezion Valuation of Ocean Sky seems reasonable at 1x P/BV, based on an estimated NTA of S$108m This is a strategic move to enable Ezion to tap into the growth potential of the marine supply base business in Australia without stretching its balance sheet and resources further, while allowing the company to stay focused on its core liftboat and service rigs business In addition, c. US$30m capex spent on the marine supply base will be freed up for re-investment We have reduced the earnings contribution from marine supply base from 100% to 45.15% and imputed in the 2% share cap increase This leads us to trim FY13/14/15F EPS by 2.2/3.3/3.8% There is EPS dilution in the near term due to the time lag between investment and earnings contribution from the marine supply base expansion, which is still in its infancy Post exercise, Ocean Sky is projected to have cash of c.S$60m for business expansion We have not factored in any potential from this Our TP is adjusted to S$3.10 following the EPS revision, still pegged to 14x FY13/14F PE The share price weakness post announcement is unwarranted and we advocate to BUY the shares on weakness Ezion offers strong growth of 54% EPS CAGR (FY12-15F) and earnings visibility is high as c.90% of revenue over FY13-14 is backed by secured contracts UOB KAY HIAN says... WILMAR INTERNATIONAL | BUY | TP: S$3.80 The sugar division will be the growth focus for Wilmar which is targeting new emerging markets Africa and Indochina Growth from the sugar division is expected to outshine soybean crushing operations in China, which are still in overcapacity and putting pressure on margins Palm operations should perform in line with expectation with the upstream affected by lower ASP and downstream driven by volume growth The key takeaway from our recent meeting with management is that sugar will be the growth focus for Wilmar with its recent acquisition in Africa and expansion into new emerging markets in Indochina The growth in the sugar division will cushion the volatility from the soybean crushing division, which is seeing declining contribution to group pre-tax profit (PBT) (2011: 20.3% of PBT, 2013F: 11.7%) From our recent meeting with management and noting the developments in the key industries, we conclude that: a) The sugar division will do well as crushing volume is ahead of schedule while early harvesting allows farmers to replant affected areas to minimise the low yield impact in next year's harvest. 3Q13 will see stronger yoy contribution in volume and margins b) Palm & lauric margin continues to do well despite rising competition in Indonesia, thanks to the integrated processing and good margins from its niche products c) Soybean crushing margin is still a challenge despite industry data showing positive back-to-back margins since late-Aug 13. Wilmar tends not to benefit much from rising soybean prices as its soybean purchases are mostly hedged when orders are made Maintain BUY and target price of S$3.80, based on the sum-of-the-parts (SOTP) method, implying blended PE of 14.0x 2013F and 12.1x 2014F PE

SG: MARKET PULSE: Noble Group, Hankore (1 Oct 2013)

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.76

MARKET PULSE: Noble Group, Hankore

1 Oct 2013

KEY IDEA Noble Group Ltd: X2 JV will yield long-term benefits Noble Group (Noble) has announced that it has agreed to invest in a newly established private mining venture - X2 Resources - where Noble, X2, TPG will each put in US$500m. Under the agreement, Noble will be X2 Resources' preferred marketer and provider of supply chain management (SCM) and logistics services, which is in line with its strategy to focus on its core competence as a supply chain manager. While we do see benefits from the investment, we note that most will need some time to flow through i.e. more medium to long term in nature. But for now, we believe that headwinds could continue to come from the sluggish economy in China. We further expect its Agriculture segment to remain a drag on its overall profitability. Separately, the potential shutdown in Washington could also weigh on sentiment. As such, we maintain our SELLrating and S$0.76 fair value. We would be buyers below S$0.80 (recent low was S$0.785). (Carey Wong) MORE REPORTS Hankore: Potential proxy to China's urbanization HanKore Environment Tech Group is an international group investing and operating in the water environment sector. At the invitation of the company, we visited two of its projects in Jiangsu, China. The group has invested in 11 large-scale municipal water treatment projects located in Beijing and the provinces of Jiangsu, Shandong, Shaanxi and Henan, with a total contracted capacity of 1.57m tonnes per day. Hankore will spend RMB750m to expand the capacity of five other projects, which will be largely completed in 2014, and it has secured funding (both debt and equity). By focusing on the municipal waste-water treatment segment, Hankore could be also seen as a proxy to urbanization in China, based on the careful selection of its treatment plants. We currently do not have a ratingon Hankore. (Carey Wong)

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

NEWS HEADLINES - US stocks dropped on Mon, taking a little shine off the third straight quarter of gains, as investors worried about a standoff on Capitol Hill and the likely duration of a possible government shutdown. - The Ministry of Finance is raising the share buyback limit under the Companies Act for Singapore-incorporated companies from 10% to 20% with effect from today. - Growth in bank lending here continued to slow, according to numbers just released by the MAS, pointing to a generally sluggish 3Q13 for loans compared to 2Q13. - Ezion Holdings announced a restructuring and expansion plan as it tabled a bid to buy 45.15% of the enlarged share capital of Ocean Sky International. - YHM Group has secured a contract worth more than US$37m over a 20-year period to lease a set of hydroelectric power-generation equipment for power supply to a national utility board in South Asia.

SG: MARKET PULSE: Biosensors, NOL, Noble, UOL, Wilmar, YZJ, FEHT, CWT, Vard, Yoma, Singapore GDP (12 Aug 2013)

Stock Name: Biosensors
Company Name: BIOSENSORS INT'L GROUP, LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 0.96

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.95

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.76

Stock Name: UOL
Company Name: UOL GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 7.16

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.10

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.99

Stock Name: Far East HTrust
Company Name: FAR EAST HOSPITALITY TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 0.92

Stock Name: CWT
Company Name: CWT LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.08

Stock Name: Vard Holdings
Company Name: VARD HOLDINGS LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.80

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.87

MARKET PULSE: Biosensors, NOL, Noble, UOL, Wilmar, YZJ, FEHT, CWT, Vard, Yoma, Singapore GDP

12 Aug 2013

KEY IDEA Biosensors International Group: A quarter to forget Summary: Biosensors International Group (BIG) reported 1QFY14 earnings which were significantly below ours and the street's expectations. Core PATMI plunged 57.3% YoY to US$12.1m on the back of a 11.2% decline in revenue to US$76.7m, forming 10.1% and 20.0% of our original FY14 forecasts, respectively. This was due to another lacklustre quarter of contribution from licensing and royalties revenue and an inventory drawdown in its distributor sales channels in China in anticipation of new stent tenders. Our revised FY14 revenue forecast implies a 10.4% growth and comes in below management's ~15% growth guidance. We also see mounting cost pressures for BIG and slash our FY14 and FY15 core PATMI projections by 34.4% and 29.9%, respectively. Our FCFE-derived fair value estimate falls from S$1.60 to S$0.96. We expect some near-term selling pressure on the stock and downgrade BIG from Buy to HOLD. (Wong Teck Ching Andy) MORE REPORTS Neptune Orient Lines - Lacklustre 2H ahead Summary: With a disappointing set of 2Q13 results, we downgrade Neptune Orient Lines's (NOL) to SELL. Despite the onset of the 3Q13 peak season, freight rates according to the Shanghai Containerised Freight Index remain weak across the board and traditional rate hikes have yet to make up ground lost in 2Q13. In addition, volume demand should remain weak given the tepid market conditions, and supply overhang continues to render industry action moot. With this downward outlook likely to extend into the medium term, we lower our FY13/14 forecasts accordingly and reduce our P/B peg to 0.9x from 1.1x previously. As a result, our fair value estimate falls to S$0.95 (S$1.38 previously). (Lim Siyi) Noble Group Ltd: Downgrade to SELL with S$0.76 FV Summary: Noble Group (Noble) reported a poor set of 1H13 results last Wed, marred by losses in its Agricultural segment in 2Q13, such that reported earnings only met 20% of our full-year forecast. No doubt the second half tends to be seasonally stronger; but we suspect that its Agriculture segment could continue to be a drag on its overall profitability. As such, we see the need to sharply reduce our FY13 earnings forecast by as much as 43% (FY14 by 18%); the group's targeted cost savings will probably have a more meaningful impact in FY14. Even as we roll forward our 10x valuation to blended FY13/FY14F EPS, our fair value will drop sharply from S$1.09 to S$0.76. Downgrade our call from Hold to SELL. (Carey Wong) UOL Group: Boost from fair value gains Summary: UOL reported 2Q13 PATMI of S$431.4m which increased 151% YoY mostly due to fair value gains at Novena Square, United Square and Odeon Towers where valuation cap rates have compressed some 25 to 50 bps. Excluding fair value and other one-time gains, 1H13 attributable profit is an estimated S$164.4m which is broadly in line with our expectations - constituting 45% of OIR's FY13 forecast of S$368.3m - but somewhat below the street's view (41% of FY13 consensus of S$391.8m). For UOL's residential strategy ahead, we see management remaining cautious and more likely to replenish land at the rate of sales or below, and capital deployment is likely to be focused on growing recurring income in investment and hospitality assets. To recap, UOL had made a cash offer of S$2.55 per share to delist PPHG and we understand that the exit offer is now unconditional with a closing date of 13 Aug 2013. Maintain HOLD with an unchanged fair value estimate of S$7.16 (20% RNAV disc.). (Eli Lee) Wilmar: 2H13 outlook still challenging Summary: Wilmar International Limited (WIL) reported 1H13 revenue slipping 4.0% to US$20626.8m, meeting 41.5% of our full-year forecast; net profit climbed 43.1% to US$533.9m, or about 40.1% of our FY13 forecast. WIL declared an interim dividend of S$0.025/share, versus S$0.02 in 1H12. Going forward, WIL notes that the overall environment remains "challenging", but it remains cautiously upbeat that it can continue to see a seasonally stronger second half performance. As 1H13 results were slightly below forecast, we pare our FY13F earnings by 6.7% (FY14F by 3.6%). But as we roll forward our unchanged 12.5x peg to blended FY13/FY14F EPS, our fair value inches up slightly from S$3.25 to S$3.33. In view of the still difficult operating environment and the credit crunch in China, we maintain HOLD and would be buyers at S$3.10 or better. (Carey Wong) Yangzijiang Shipbuilding: Still a steady ship Summary: Yangzijiang Shipbuilding (YZJ) reported a 12% YoY rise in revenue to RMB4.4b and a 8% decrease in net profit to RMB811.7m in 2Q13, such that 1H13 net profit accounted for about half of our full year estimates, within expectations. Gross margin in the shipbuilding related segment dropped from 24.2% in 2Q12 and 25.9% in 1Q13 to 20.6% in 2Q13, while gross margin in the group's investment division remained high. Despite stiff competition in the shipbuilding industry, YZJ secured 27 effective shipbuilding contracts worth about S$1.01b in 1H13, but likely at single digit gross margins. Meanwhile, the group continues to grow its financing business, which we now forecast greater revenue contributions. We increase our FY13/14F earnings by 3-4%, and with the more favorable RMB/SGD exchange rate, our fair value estimate increases from S$0.95 to S$0.99 (based on 8x FY13/14F core earnings). Maintain HOLD. (Low Pei Han) Far East Hospitality Trust: 2Q13 below expectations Summary: 2Q13 results for Far East Hospitality Trust (FEHT) were below our expectations and the street's. Gross revenue was S$29.3m or 7.9% lower than the IPO prospectus forecast, affected by the hotels' performance. Net property income and income available for distribution came in at S$26.9m and S$23.2m, which were 6.8% and 4.1% below the IPO forecasts, respectively. 2Q13 DPS was 1.43 S cents; 1H13 DPS of 2.81 S cents tracked below our expectations, corresponding to 47% of our prior FY13 estimate of 6.0 S cents, which we now lower to 5.7 S cents. We have transitioned to a DDM-based model, from a RNAV model previously. Adjusting our FY13F revenue assumptions downwards, our FV falls to S$0.92 from S$1.01. We maintain a HOLD rating on FEHT and estimate a FY13 yield of 6.2%. (Sarah Ong) CWT Ltd: 2Q13 within expectations Summary: CWT reported a decent set of 2Q13 results that were roughly in-line with our expectations. Revenue jumped 66% YoY to S$1.7b, driven by higher contribution from its newly established Commodity SCM business. However, the group incurred (i) higher administrative expenses (S$43.7m, +17% YoY) from management and restructuring costs, and (ii) higher financing costs (S$8.5m, +8% YoY) due to higher borrowing and trade volume. The declines were partially offset by improved contribution from its joint-ventures and tax saving, resulting in net profit easing 6% YoY to S$18.1m for 2Q13. For 1H13, revenue and net profit formed 50% and 46% of our FY13F estimates respectively. We will speak to management to obtain more colour. In the meantime, we keep our BUY rating and S$2.08 fair value estimate unchanged. (Chia Jiunyang) VARD Holdings: Secures USD1.1b contract Summary: Vard Holdings Limited has secured contracts for the design and construction of four Pipe Lay Support Vessels (PLSVs), worth about USD1.1b (NOK 6.5b). The contracts were from joint ventures of DOF Subsea and Technip. Two of the PLSVs will be built in Romania in 2Q-3Q16, while the remaining two will be delivered from Brazil in 4Q16-2Q17. We are in the process of adjusting our models. In the meanwhile, we put our Sell rating and S$0.80 fair value UNDER REVIEW. (Chia Jiunyang)

Yoma Strategic Holdings: JV successful in Mandalay airport tender Summary: Yoma reported that it has a 5% stake in a consortium, with Mitsubishi Corp. and JALUX Inc., that has successfully tendered for the upgrade and operation of the Mandalay International Airport. The consortium is expected to be awarded the tender upon negotiation, finalization and agreement of the final contract with relevant authorities. While this is a positive development, we see the financial impact on Yoma to be likely capped given that it has only a 5% stake and that the initial equity contribution by all the parties are estimated at around US$3.38m. Yoma also noted that the investment is not expected to have any material financial impact on the consolidated net tangible assets and earnings per share for the current year ending Mar 2014. Maintain HOLD with an unchanged fair value estimate of S$0.87. (Eli Lee) Singapore Economy: 2013 GDP growth forecast upgraded to 2.5-3.5% Summary: According to the MTI, the Singapore economy grew by 3.8% YoY in 2Q13, better than the street's expectations of 3.5% growth, and also better than the 0.2% growth seen in 1Q13. On a seasonally adjusted, annualised basis, the economy expanded by 15.5% QoQ, and was significantly higher than the 1.7% expansion in 1Q13. This was mainly driven by manufacturing, which grew by 32.1% QoQ, reversing the 12.1% contraction in 1Q13, largely due to higher output in the biomedical manufacturing and electronics clusters. Construction grew by 11.2%, compared to 1Q13's 10.3% growth. Finally, services expanded by 11.5% after 1Q13's 7.8% rise, driven mainly by the wholesale & retail trade and the transportation & storage sectors. As global macroeconomic conditions are expected to pick up in 2H13, the MTI has upgraded Singapore's 2013 GDP growth forecast from 1.0-3.0% to 2.5-3.5%. (Low Pei Han) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stock indexes declined on Fri, with the Dow Jones Industrial Average halting its longest weekly winning streak since Aug of last year. - Singapore-Listed companies have posted a lower aggregate 2Q13 net profit of S$7.04b, down by 2.8% YoY. - Raw material prices won support last week from upbeat Chinese economic data, while cocoa futures hit 11-month high points on tight supply fears, analysts said.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: Credit Suisse

Price Call: SELL

Target Price: 0.90

Stock Name: Yongnam
Company Name: YONGNAM HOLDINGS LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.41

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD

Research House: OCBC

Price Call: BUY

Target Price: 6.48

Market Compass

27 June 2013~ Good Morning Singapore!

Singapore Idea Snippets:

27 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 Quote for the day :Technology is just a tool. In terms of getting the kids working together and motivating them, the teacher is the most important. - BILL GATES Singapore: The Day Ahead SINGAPORE DAYBOOK:Output up 2.1% in May as pharma jumps. Transport, precision engineering sectors contract; Q2 GDP growth put at 2% [SINGAPORE] Yet another jump in pharmaceutical output drove manufacturing output higher than expected in May, setting the stage for a sequential rebound in second quarter GDP. Industrial production grew 2.1 per cent year- on-year in May, trouncing the market's expectations for just 0.1 per cent growth but slowing from April's revised growth of 5 per cent. But if the biomedical sector's 22.8 per cent growth is excluded, industrial output would have shrunk 2.4 per cent instead. After seasonal adjustments, manufacturing output grew 1.2 per cent month-on-month. Excluding biomedical production, output would have risen 1 per cent from April. (Source: The Business Times) MARKET SCOOP CFOs upbeat about growth prospects Sin Heng Heavy Machinery plans 1-for-4 rights issue OCBC starts Sembcorp Industries with 'buy' JTC tenders to sell 4 Tuas South sites WEin jv to explore oil and gas in Myanmar Banks slow to revive Singapore trading desks after rate-fixing cull Mugabe heads to Singapore for health check before vote (Source: The Business Times) CREDIT SUISSE Securities says... NOBLE GROUP LTD | UNDERPERFORM | TP: S$0.90 We assume coverage on Noble Group with an UNDERPERFORM rating and a TP of S$0.90, as we expect the company's ROE to be below its COE in FY13, driven by weakness in Agriculture Noble made its first loss in the Agriculture segment in 1Q13, and we expect challenges faced to persist into 2Q13 Lower raw sugar prices are likely to offset higher utilisation of its Brazilian sugar mills Logistics bottlenecks in Brazil will only ease in July at the earliest Oilseed processing in China could see weakness caused by structural overcapacity Despite initiatives taken to reduce its Selling, Administrative and Operating expenses by US$100 mn, we estimate Noble needs to earn an Energy GP/ton of US$9.50 and Agriculture GP/ton of US$4.50 to generate an ROE of above 10.5%, which we believe is unlikely given macro headwinds Our FY13 EPS forecasts are 10% below consensus We base our target price of S$0.90 on 0.9x P/B, in line with global peers DBS VICKERS Securities says ... YONGNAM HOLDINGS LIMITED | BUY | TP: S$0.41 Yongnam has won two new civil engineering subcontracts worth HK$166m (S$27m) in Hong Kong The two projects are namely the Hong Kong Express Link Central-Wan Chai Bypass Tunnel to be completed by April 2014 and the Shatin to Central Link MTR project due for completion by December 2013 The project value is small in our view and within our project win expectations for the year No change to our earnings forecast on this event for now With regards to Yongnam's exposure to insolvent Downtown Line 2 (DTL2) contractor Alpine Bau GmbH, we estimate this could lower our current TP of S$0.41 by 5% if Yongnam provides for losses Yongnam has reported that its exposure will be about S$5m (10% of FY13 earnings) Main contractor Alpine Bau GmbH has filed for insolvency and Yongnam is exposed to package C918 of DTL2 The project value is S$25m, started in March 2011 and due to end in 2Q13 to 3Q13 As this project is very near completion, we estimate that write offs could amount to about c.S$5m if management chooses to do so Otherwise, we remain positive as Yongnam is a strong contender for Yangon Airport Project Results of Yangon Airport's expansion project bid are expected to be announced around July We believe Yongnam's consortium is a strong contender and is one of the front runners If it wins the contract, the Yangon Airport project could add another S$0.12 to the stock price based on our assessment Maintain BUY OCBC Securities says... SEMBCORP INDUSTRIES | BUY | TP: S$6.48 Sembcorp Industries (SCI) is a major industrial group primarily involved in the businesses of 1) utilities, 2) marine and 3) urban development SCI is now a more focused group today after a streamlining of its businesses The nature of SCI's utilities business is relatively stable, as the demand for utilities generally does not vary significantly over a short period of time At the same time, growth is driven by asset acquisition and construction, so there is growth potential, provided that good investment decisions are made SCI's marine arm is also well positioned to capitalise on demand from the offshore oil and gas industry, given its market -leading position Finally, SCI's urban development segment, though small in comparison to the utilities and marine arms, possesses growth potential with its focus on emerging markets SCI has had a good track record in its three main business segments, inspiring confidence in the business and investment community The long-term outlook for its businesses also looks bright, though the Singapore utilities business may, in the short term, be impacted by an expected increase in competition The group has been consistent in paying out dividends of at least S$0.15/share each year since 2009, implying a minimum dividend yield of 3.1% at current prices Initiate with BUY and S$6.48 (based on sum-of-parts method) fair value estimate

STI edges up; Noble drags

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: Maybank Kim Eng

Price Call: HOLD

Target Price: 1.17

Singapore shares rose slightly on Wednesday, while shares of Noble Group tumbled after posting weak results for the first quarter.

The Straits Times Index was up just 0.2% to 3451.04 points, while the MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.1%.

Shares of Noble fell as much as 6.3% to $1.045, the lowest since July 2012.

Noble was one of the most actively traded stocks by value on Wednesday. Nearly 57 million shares changed hands, 2.8 times the average full-day volume over the past 30 days.

Noble, a Singapore-listed commodities trader, said its first-quarter net profit fell 62% to US$41.3 million ($51.4 million), attributing the results to a challenging operating environment.

“Poor earnings visibility and level is likely to be a negative driver of stock price in the near-term,” said Maybank Kim Eng, which downgraded Noble to “hold” from "buy” and lowered its target price to $1.17 from $1.53.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 1.47

Stock Name: SMRT
Company Name: SMRT CORPORATION LTD

Research House: UOB KayHian

Price Call: SELL

Target Price: 1.30

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: UOB KayHian

Price Call: HOLD

Target Price: 11.21

Market Compass

02 April 2013~ Good Morning Singapore!

Singapore Idea Snippets:

02 April 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 : Education is the most powerful weapon which you can use to change the world. - NELSON MANDELA Singapore: The Day Ahead SINGAPORE DAYBOOK: SPH to pay up to $60m for sgCarMart. CEO says acquisition will add to the breadth of SPH's online classifieds portfolio. [SINGAPORE] Singapore Press Holdings (SPH) yesterday agreed to pay up to $60 million in cash for popular online car portal, sgCarMart (SGCM). The deal includes SGCM's online vehicle classifieds site, car auction platform, online marketing site as well as a service provider for car loans, insurance and settlement services. SPH's announcement yesterday said that it had agreed to buy all of the issued shares of SGCM Pte Ltd from its current owners, and to purchase certain trademarks and other intellectual property rights from SGCM and its subsidiary, Quotz Pte Ltd. It added that the maximum purchase price of $60 million was arrived at "following arm's length negotiations on a willing-buyer, willing-seller basis and taking into account, inter alia, various factors such as the existing assets, intellectual property rights, goodwill, financial position and business prospects of SGCM". MARKET SCOOP CapitaLand restructures Surbana Corp S'pore, Malaysia and Thailand set common standards for securities offering CAO starts operation of joint-venture oil terminal in S Korea Demonstrations hit HPH Trust's HK port No bid for STX Corp's shares in STX Pan Ocean Koyo adjusts FY12 results for Poh Lian receivables HDB resale price index up 1.2% q/q in Q1 Private property prices rose less in Q12013: URA CIMB Securities says... NOBLE GROUP | OUTPERFORM | TP: S$1.47 Slower economic activity, heightened risk aversion and earnings disappointments have pinned Noble's share price near to all-time lows The IMF now projects an acceleration of global growth in 2013-2014, suggesting that Noble's fortunes could be turning The stock screens well not just relative to its historical trading band but also against its peers, from both P/E and P/BV perspectives Higher economic activity and consumption will spur demand for raw materials, leading to improved earnings Against a backdrop of low expectations and low ownership, any positives from earnings surprises and a return of risk appetites could spark Noble's rerating FY13 will be a year of earnings recovery, driven by sustained profits from energy and metals, coupled with normalisation of agriculture profits, which tumbled to a record low in 2012 We maintain our Outperform rating, EPS estimates and target price (10.1x CY14 P/E, 0.5SD below the 5-year mean) UOB KAY HIAN says... SMRT CORPORATION | SELL | TP: S$1.30 SMRT has announced that the group is expected to report a net loss for 4QFY13 This is in line with deteriorating profitability due to: a) increasing operating costs coupled with a lack of fare increments, and b) a S$17m non-cash goodwill impairment for SMRT's associate, Shenzhen ZONA Transportation Group Co. Ltd In our view, SMRT is likely to cut full-year dividends from 8.5 S cents and 7.45 S cents in FY11 and FY12 respectively to an expected 6.1 S cents for FY13, on the back of heavy capex commitments and increasing gearing We expect staff headcount and repair and maintenance costs to continue escalating on the back of higher service, reliability and operational performance standards We have slashed our FY13 and FY14 profit forecasts by 25% (11% excluding one-off impairment loss) and 5% respectively, due to the S$17m goodwill impairment and higher-than expected wage cost increases Maintain SELL with a DCF-derived target price of S$1.30 (no change), assuming 7.1% cost of equity and 1.5% terminal growth DMG OSK Securities says... KEPPEL CORPORATION | NEUTRAL | TP: S$11.21 Keppel announced orders for four KFELS B Class jackup rigs from Mexico-based drilling company, Grupo R, for USD820m (SGD1bn) The four KFELS B Class design rigs will delivered between 2Q2015 and 4Q2015 We reiterate our view that Singapore yards may find it hard to raise prices to expand margins due to the rush of the Chinese yards into the jackup market with near guaranteed take-out financing The orders lifted its YTD order book to SGD1.59bn, 32% of our full-year forecast of SGD5bn In our view, jackup rigs will be the key order driver this year as the fleet renewal cycle is still intact and few orders were placed last year We are neutral on the stock: i) unexciting EPS growth as margins return to normal levels; ii) property earnings will see significant decrease due to absence of lumpy earnings in FY13; iii) valuation is fair at 14.3x FY13F P/E given slowdown in earnings

MARKET PULSE: Noble Group, TEE International (7 March 2013)

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.19

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.30

MARKET PULSE: Noble Group, TEE International

7 Mar 2013

KEY IDEA Noble Group: Focus on asset recycling, cost savings We recently attended Noble Group's (Noble) post-results analyst briefing and one of the key takeaways was management's focus on maintaining an "asset light" strategy with opportunistic capital recycling. Another key takeaway was the focus on cost savings, including interest savings. While it is good that Noble has taken steps to improve its operations, we note that the macro picture continues to be quite challenging in the medium term, especially for its Agricultural business. As such, we maintain our HOLD rating on the stock with an unchanged S$1.19 fair value. (Carey Wong) MORE REPORTS TEE International: Property spin-off looks on track TEE International announced recently (22 Feb) that it would inject S$16m worth of its property assets into wholly owned subsidiary TEE Land, as part of its plans to spin off its real estate business and list it separately on SGX by May. Certain pre-IPO investors have also agreed to invest S$4m in TEE Land when the restructuring is complete. Although TEE's share price has declined in recent days, we expect its share price to remain supported in the near term by expectations of a special dividend if its plan succeeds. Still, we prefer to remain cautious on TEE until we see stronger contributions from its real estate business, after its weak 2QFY13 results. We maintain our fair value estimate of S$0.30 and HOLD rating for TEE. (Conrad Tan)

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

NEWS HEADLINES - US stocks finished mostly higher on Wednesday, with the Dow Jones notching another record high with a 0.3% rise after an encouraging report on private-payrolls growth. - Three companies - Yong Xin International Holdings, Matex International and China Oilfield Tech - have been added to the SGX watch-list. - S-REITs delivered the region's highest dividend yield as at the end of last month, according to the latest month-end Asia Index Report produced by the FTSE Group. - Global Logistic Properties Limited said it had signed 15,000 sqm of new leases at its first development in Changzhou, China. - Global Strategic Holdings announced plans to raise S$246.8m in a rights issue, just two weeks after it said the Lippo group and a PE fund have invested S$37.5m in it. - The Singapore government's latest moves to ensure Singaporeans get a fair chance at higher-skilled jobs continued to win MPs' approval on the Budget debate in Parliament. - The Monetary Authority of Singapore has announced that it will, for the first time, review the financial products industry. - Non-executive directors (NED) in Singapore companies saw a moderate increase of 5.3% in their annual average fees per NED to S$52k in FY11/12.

Noble Group cut to Neutral from Buy: Citi

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: Citigroup

Price Call: HOLD

Target Price: 1.28

Singapore listed Noble Group (N21.SG) has been cut to Neutral from Buy with its target price slashed to $1.28 a share vs $1.68 by Citi Research Equities due to weak earnings.

Noble Group on Thursday announced a 14% drop in its 4Q net profit to US$91.2 million ($113.5 million) vs US$105.7 million a year earlier due to a contraction in the company's operating income margins, with FY2012 net profit rising 9% to US$471.3 million.

“We reduce our rating on Noble to Neutral as its 2 sequential quarters of weak performance in agri lead us to lower our expectations on FY13E-14E ROE to 11-13%, close to what its stock price currently implies,” Citi says in its note.

Noble is currently down 1.7% at $1.1550 a share.

Noble down 2.4%; Argentina grain registry suspension

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: UOB KayHian

Price Call: HOLD

Target Price: 1.17

Noble (N21.SG) is down 2.4% at $1.22 in solid volume, but the decline may be as much due to Monday's 2.0% rise as news Argentina suspended it from a key grain registry for alleged tax evasion; a person at Noble said the suspension wouldn't impact operations.

"A Noble spokesman said the exclusion will only result in a slower procedure to reimburse the VAT and the firm was in the process of appealing," notes Eugene Ng, an analyst at UOB KayHian, in a note, adding similar measures were taken against other major grain exporters. "If Noble is subjected to higher tax rates, we believe there could be some short-term decline in grain volumes from Argentina. However, impact to Noble's bottomline is not likely to be material."

He rates Noble Hold with a $1.17 target. Noble could see some added pressure as 13.2%-owned Yancoal (YAL.AU) said heavy rainfall disrupted production at its Yarrabee and Middlemount open cut mines in central Queensland state, with Middlemount output expected to be affected for at least three weeks.

Some confidence may be returning to Noble: OCBC

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.28

Some confidence may be returning to Noble despite its medium-term outlook remaining murky, OCBC says in a note to clients.

It notes the stock dropped sharply after Vice Chairman Emeritus Harindarpal Singh Banga offered to sell 225 million shares at $1.10-$1.12, with the sale eventually done at $1.10, with Singh’s stake falling to 2.3% from 5.7%. While the buyer of the around 3.5% Noble stake isn’t known, key insiders, including the chairman emeritus and the CEO have increased their stakes, it notes.

“There may be some opportunity to pick up some Noble shares around current levels for a technical rebound, but we would still be looking to take profit around $1.30 or higher in the near term.” Its fundamental analysis has a Hold call with $1.28 fair value. The stock is up 1.9% at $1.08, but it remains down more than 17% month-to-date.

MARKET PULSE: Venture, GPH, Noble, UOL, City Dev, Wilmar, Valuetronics (9 Nov 2012)

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 9.22

Stock Name: GP Hotels
Company Name: GLOBAL PREMIUM HOTELS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.29

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.28

Stock Name: UOL
Company Name: UOL GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 5.48

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 13.10

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.06

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.21

MARKET PULSE: Venture, GPH, Noble, UOL, City Dev, Wilmar, Valuetronics

9 Nov 2012

KEY IDEA Venture Corp: Look beyond the short-term Venture Corp (VMS) reported a 8.1% YoY decline in its 3Q12 PATMI to S$32.6m despite revenue increasing 4.3% to S$608.9m. Topline was within our expectations, although bottomline missed due to weaker-than-expected margins. For 9M12, revenue of S$1,795.0m (-0.3%) and PATMI of S$101.7m (-14.2%) formed 72.7% and 67.7% of our FY12 estimates, respectively. The general sentiment among VMS's customers remains weak in the near-term, but we believe that its product pipeline from both new and existing customers would yield more meaningful contribution in FY13. While we pare our FY12 revenue and PATMI estimates by 1.6% and 9.1%, respectively, we leave our FY13 forecasts intact. We opine that investors should position themselves for the expected recovery in VMS's business in FY13, and hence roll forward our valuations to 15x FY13F EPS. This raises our fair value estimate from S$8.72 to S$9.22. Coupled with an attractive FY12F dividend yield of 7.1%, we maintain our BUY rating. (Wong Teck Ching Andy) MORE REPORTS Global Premium Hotels: Maintain FV of S$0.29 Global Premium Hotels (GPH) registered 3Q12 results that were below our expectations. 3Q12 revenue increased by 8.1% YoY to S$14.9m. EBITDA margin fell 6.6 ppt to 59.8% (excluding one-off expenses of S$0.5m for 3Q12). 9M12 EPS of 1.34 S cents equaled 72% of our prior FY12F estimate of 1.87 S cents, which we now lower to 1.75 S cents. GPH has begun construction of its new mid-tier Parc Sovereign Hotel located at Tyrwhitt Road in Aug 2012. An independent valuer has estimated a gross development value S$150m, implying a potential fair value gain of S$42m. We have incorporated the Tyrwhitt site development into our RNAV model. We maintain our fair value of S$0.29 (using a 10% discount to RNAV) and a BUY rating. GPH intends to distribute at least 80% of net profit after tax for FY12; we estimate an attractive FY12F dividend yield of 5.8%. (Sarah Ong) Noble Group Ltd: Downgrade to HOLD Noble Group (Noble) reported 3Q12 revenue of US$22.7b, though up 9% YoY, it was down 6% QoQ. Net profit came in at US$75.2m; while it had reversed a net loss of US$17.5m a year ago, it missed the street's US$155m forecast. For 9M12, revenue grew 15% to US$69.8b, meeting 75% of our FY12 forecast, while net profit climbed 17% to US$380.1m, or 68% of our full-year number. Estimated core earnings (without disposal gains) of US$282.9m formed just 50% of our forecast. We expect Noble to see a negative knee-jerk reaction to its lower-than-expected earnings (we have also cut our FY12 and FY13 forecasts to incorporate still-weak margins). We also downgrade our call to HOLD, given that the stock has risen some 21% since our upgrade on 14 Aug. But we believe Noble should start looking towards a reasonable recovery next year; and we have moved our valuation to FY13 with a higher 12x (versus 10.5x blended previously) peg, which keeps our fair value unchanged at S$1.28. (Carey Wong) UOL Group: 3Q12 earnings - no surprises UOL reported 3Q12 PATMI of S$87.8m, down 13% YoY mostly due to lower development profits and renovation works at Pan Pacific Singapore. We judge this set of results to be mostly within expectations and, excluding fair value and other gains, adjusted 9M12 PATMI cumulates to S$258.2m which makes up 74% of our annual FY12 forecast. This being so, we see the market likely taking a neutral view on 3Q numbers. We expect new residential launches at Bright Hill and St. Patrick Rd in 1H13, with Bright Hill likely to come first around Mar-Apr 2013. Management continues to execute well, and upcoming launches would be key catalysts for the share price over the mid-term. Maintain HOLD with a higher fair value estimate of S$5.48 (30% RNAV disc.), from S$5.26 previously mostly due to updated valuations of listed holdings. (Eli Lee) City Developments Limited: Top bid for Sengkang EC site City Developments Limited (CDL) put in the top bid of S$135m (S$296 psf) for an EC site at Sengkang West Way/Fernvale Link. The tender attracted a total of six bidders and CDL's bid was only 0.1% above the second highest bid. This site, with a total GFA of 455k sf, is located near Layar LRT station, Fernvale Point and the upcoming Seletar Mall, and the development is expected to consist ~380 units. We estimate breakeven and selling ASPs at S$S$600 psf and S$720 psf, respectively; the latter generally in line with price levels at comparable projects, such as Twin Waterfalls and Riverparc Residence, over the first three quarters of FY13. We expect this acquisition to accrete 1.5 S-cents to RNAV but leave our fair value estimate unchanged at S$13.10 (15% RNAV disc.) pending approval of this acquisition. Maintain BUY. (Eli Lee) Wilmar: Stronger 3Q12 showing Wilmar International Limited (WIL) reported a stronger set of 3Q12 results, with reported net profit jumping 26% YoY to US$405.8m, even though revenue slipped 6% to US$12.3b, aided by better performance at most key segments (except for Oilseeds & Grains and Plantations & Palm Oil Mills). Excluding non-operating items, net profit came in around US$388.0m, from US$451.4m a year ago. 9M12 revenue inched up 2% to US$33.8b, meeting 73% of our full-year estimate, while reported net profit fell 29% to US$778.7m; core net profit fell 41% to US$766.0m, but still met 80% of our FY12 estimate. While management maintains its positive long-term outlook, we note that near-term challenges remain. We will be speaking with management later to get further updates. Until then, we place our Hold rating and S$3.06 fair value under review.(Carey Wong) Valuetronics Holdings: 2QFY13 core earnings above expectations Valuetronics Holdings Limited (VHL) reported its 2QFY13 results this morning. Revenue from continued operations was flat YoY at HK$595.5m (+0.2%), or 11.6% below our forecast. Reported PATMI plunged -88.5% YoY to HK$3.3m as VHL incurred hefty termination expenditure and provision for impairment on property, plant and equipment (PPE) from its Licensing division (announced its decision to cease operations during its 1QFY13 announcement). Adjusting for this and other exceptional items, we estimate core PATMI of HK$31.5m, a 34.1% YoY increase, and this exceeded our HK$26.2m projection. With regards to its Licensing division, VHL said that it does not expect to incur further provision for termination expenditure and impairment losses for PPE. Looking ahead, challenging conditions in the manufacturing industry such as rising labour costs are expeced to continue and we expect this to place some pressure on VHL's margins. We will provide more details after the analyst briefing next week. We maintain our HOLD rating but place our S$0.21 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 extended losses for a second day despite upbeat data showing that jobless claims fell last week, as investors fretted about the looming fiscal cliff and Europe's troubles. The Dow fell 0.9% to 12,811.32, while the S&P 500 Index slid 1.2% to 1,377.51 and the Nasdaq 1.4% lower at 2,895.58. - The ECB held its main interest rate at 0.75%. The euro zone's economy is weak and not improving, ECB president Mario Draghi warned. - Sim Lian Group's 1Q13 PATMI slumped 64% YoY to S$37.4m as revenue fell 28% to S$190m, mainly due to lower revenue contribution from two projects that obtained their TOP a year earlier. - GP Batteries' 2Q13 PATMI fell 88% YoY to S$0.3m as revenue slid 1% to S$200m, mainly due to lower sales in Europe. Its bottom line was also hurt by losses at associates and foreign exchange losses due to a weaker US$. - Food Junction Holdings' 3Q12 net loss attributable to shareholders widened to S$5.4m, from S$0.8m a year ago, as revenue declined 0.6% to S$13.9m, mainly due to permanent and temporary closures of some food courts.

Noble to see strong 3Q12 earnings recovery: UOB-KH

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.52

UOB KayHian tips a strong turnaround in Noble’s 3Q12 results on the absence of cotton-default and carbon-credit losses, improved Brazil sugar-processing volumes, improved soybean-crush margins and firm oil prices. It forecasts a 3Q12 net profit of US$153 million ($188 million) vs 3Q11’s US$18 million loss.

It expects sugar volumes to rise on, with Brazil’s sugar-cane season in full swing, and processing volume should grow on-year, with higher utilization, although profitability could be moderated as 3Q12 sugar prices are down 25% on-year. It notes Shanghai JC Intelligence data show China soybean-crush margins rose to around an average CNY201/ton ($39.3/ton) vs 3Q11’s negative-CNY30/ton, the highest since 4Q10.

“Noble’s stock will be supported by the continued earnings recovery and strengthening balance sheet.” It notes Noble received US$355 million in 3Q12 and expects another US$360 million by January from the Gloucester-Yancoal deal. "With lower net gearing (about 0.9x vs greater than 1x prior 2012) and a stronger balance sheet, Noble is in a good position to capitalize on acquisition opportunities."

It rates Noble Buy, target $1.52. The stock is up 0.4% at $1.295.

Noble entering capital deployment phase: Citi

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: Citigroup

Price Call: BUY

Target Price: 1.68

Noble is entering a capital-deployment phase after its capital recycling from the concluded Yancoal/Gloucester and Tenmar deals, which would increase its 2Q12 cash position of US$1.4 billion ($1.7 billion) by 55% and reduce net gearing by half from 30%, Citigroup says. The proposed transaction to acquire Arrium is a start for capital deployment, it says.

“Noble is looking to reshape its metals and ores segment into a similar model as its successful energy/coal business which is based on flow management for long-term clients. Noble’s MMO division is now its smallest profit contributor at only 8% of its profit pool in 2Q12, a sharp contrast to 1Q10 when the segment contributed to 38% of its profit pool.”
 
Citigroup adds, the worst of Noble’s negative earnings-revisions cycle is likely over, with the stock-price bottom likely marked. “Noble also screens well from the perspective of generating performance in both QE1 and QE2. From Singapore’s stock market perspective, industrials and resources were the two stock categories that performed well in the three months post QE1 and QE2.”

It rates Noble Buy with $1.68 target. The stock is down 2.3% at $1.29.

MARKET PULSE: Noble, ComfortDelgro, Tat Hong, SingTel, CDL, STX OSV, CSE Global, KSH

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.28

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.53

Stock Name: Tat Hong
Company Name: TAT HONG HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.39

Stock Name: SingTel
Company Name: SINGTEL

Research House: OCBC

Price Call: BUY

Target Price: 3.68

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 11.53

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.00

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.80

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.25

MARKET PULSE: Noble, ComfortDelgro, Tat Hong, SingTel, CDL, STX OSV, CSE Global, KSH

14 Aug 2012

KEY IDEA Noble Group Ltd: Upgrade to BUY with new S$1.28 FV Noble Group (Noble) reported 1H12 revenue of US$47,069.0m, meeting 54.4% of our original FY12 forecast; core earnings came in around US$230.3m, or 40% of our full-year forecast. On its financial position, Noble notes that it currently has about US$6.2b worth of liquidity headroom, which management believes "eliminates any refinancing risk in the short and medium term". It adds that it expects to receive some US$800m in 2H12 from the Gloucester-Yancoal merger and sale of a tank farm asset in Brazil. Noble further expects the market stress to provide it the opportunity to attract talent and invest in attractive assets to support its franchise. To account for the 1H12 performance, we are raising our FY12 revenue forecast by 7.9% but paring our core earnings by 2.8% on weaker margin assumptions. As we are also pushing out our valuations from FY12F EPS to blended FY12/13F EPS (still based on 10.5x), our fair value improves from S$1.21 to S$1.28. We also upgrade our call from Hold to BUY. (Carey Wong) MORE REPORTS ComfortDelgro: Stable 1H12 results ComfortDelgro announced a 5.7% YoY increase in revenue to S$1.7b on the back of broad-based growth across all but one segment and better overseas performance. We do not anticipate any surprises for CD in 2H12 and expect revenue to continue its broad-based growth across its various segments. In addition, any corresponding increases in operating expenses will be controlled i.e. through fuel hedges and effective management. As for CD's current price valuation, we deem the recent strength and resilience is a reflection of the market's desire for safe and stable yields given uncertain global economic climate. We stand by our conservative payout assumption of 50% of PATMI for our dividend-discount model as CD has consistently paid dividends of around 50-53% of its PATMI over the past four years. Leaving our earnings estimates unchanged, we maintain HOLD at S$1.53. (Lim Siyi) Tat Hong: Recovery back in full swing Tat Hong Holdings (Tat Hong)'s 1Q13 net profit attributable to shareholders tripled to S$16.7m (1Q12: S$5.5m) such that the quarter earnings formed 24% and 31% of ours and the street's full year estimates. Revenue jumped by 36% YoY to S$215.3m and overall gross margin increased by nearly four percentage points to 39.2% on better pricing and higher utilization rates. Unlike a year ago when the group faced a cyclical weakness in construction activities, business disruptions from the Queensland floods and management issues with its China operations, Tat Hong is now making a strong comeback on the prospect of continued growth (from increased infrastructure spending) across the region. We maintain our BUY rating and further raise our fair value estimate to S$1.39 (previously S$1.21) on the improved earnings outlook. (Chia Jiunyang) SingTel: Soft start to FY13 SingTel reported its 1QFY13 results this morning, with revenue falling 1.6% YoY to S$4533.0m, meeting around 24% of our full-year forecast; impacted by the 3% depreciation in the AUD against the SGD. Core net profit (excluding exceptional items) slipped 2.6% to around S$850.0m, or 22.9% of our FY13 estimate. One of the key reasons for the fall was due to lower Associates' contribution, which fell 14.7%, mainly due to the weakening of the regional currencies (especially INR and IDR against the SGD). Meanwhile, SingTel has affirmed its previous guidance for FY13, where consolidated revenue should grow at low single-digit level and EBITDA to remain stable; also estimates free cash flow to be around S$2.6b, after spending around S$950m capex in Singapore and A$1.1b in Australia; also expects ordinary dividends from regional mobile associates to grow. We will have more after the analyst teleconference. Until then, we place our Buy rating and S$3.68 fair value under review. (Carey Wong) City Developments Limited: First take on 2Q12 results City Developments (CDL) reported 2Q12 PATMI of S$137.7m, which was down 38% YoY mostly due to the absence of gains from the Corporate Building disposal and sale and leaseback of Studio M in 2Q11. 2Q12 revenues came in S$787.8m, down 20% YoY. We view these results to be broadly in line with consensus and our expectations. We continue to see healthy take-up rates at launched projects with 1,299 units sold in 1H12 (1H11: 809) and the group expects to launch two projects in 2H12, which are 508-unit and 912-unit condominiums projects at Alexandra Rd and Pasir Ris Grove respectively. The hotel subsidiary, Millennium & Copthorne, reported 1H12 PATMI of GBP58.4m, down 6% though RevPar was up 4.6% for a like-for-like basis. We would be speaking with management later regarding 2Q12 results and in the meantime, put our Buy rating with fair value estimate of S$11.53 (20% RNAV discount) under review. (Eli Lee) STX OSV: 2Q12 results in line STX OSV's 2Q12 revenue increased by 21.6% YoY to NOK3.3b and net profit remained flattish at NOK279m (+2.6% YoY), such that 1H12 net profit formed 44% of our full year estimates. 2Q order intake was nearly NOK 5.0b, bringing its order-book to NOK18.3b. The group also announced a special interim dividend of 13 S cts (versus last year's interim dividend of 5 cents) - a more than doubling in dividend payout from the previous year. Pending a teleconference later, we keep our Buy rating but put our S$2.00 fair value estimate under review. (Chia Jiunyang) CSE Global: 2Q net profit of S$22m CSE Global reported a decent set of 2Q12 results, with net profit attributable to shareholders reverting to S$21.1m from a loss of S$7m in the year-ago period. The results were in line with ours and the street's expectations. 2Q net orders were S$115m, bringing the outstanding orders to S$370m as of end of June 2012. We will meet up with the management later for more updates. In the meantime, we keep our Buy rating and put our S$0.80 fair value estimate under review. (Chia Jiunyang)

KSH Holdings: 1QFY13 numbers broadly within expectation KSH reported 1QFY13 PATMI of S$4.3m, up 66% YoY mostly due to higher profits from the construction business and a disposal gain from the sale of an investment property in China. We judge this result to be within expectation as 1QFY13 PATMI now makes up 30% of our FY13 forecast - tracking marginally above due to the disposal gains. 1QFY13 topline of S$55.2m increased 35.3% YoY again due to increased revenues from the construction business and the investment property disposal. The construction order book stands of ~S$416m as of end Jun 12, which we view as relatively healthy. We would speak further with management regarding these results later today and, in the meantime, put our Hold rating with a $0.25 fair value estimate under review. (Eli Lee) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks dropped following a poor reading on Japan's economic growth. The Dow fell 0.3% to 13,169.43. The S&P 500 dropped 0.1% to 1,404.11. - Wheelock Properties reported a 31% YoY increase in 2Q12 PATMI to S$48.5m. Revenue had jumped 72% YoY to S$116.6m. - Boustead Singapore posted 1Q13 PATMI of S$12.2m, up 43% YoY. Revenue rose 25% YoY to S$113.35m. - Bukit Sembawang saw 1Q13 PATMI fall 40% YoY to S$27.7m. Revenue had declined 13% YoY to S$105m. - Metro Holdings registered 1Q13 PATMI of S$14.8m, versus S$3m a year ago. Revenue climbed 3.7% YoY to S$44.2m. - Tiong Seng posted 2Q12 PATMI of S$9.7m, up 6% YoY. Revenue soared 55% YoY to S$130m.

Citi upgrades Wilmar to buy, cuts Olam target price

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: Citigroup

Price Call: BUY

Target Price: 4.80

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: Citigroup

Price Call: BUY

Target Price: 1.68

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: Citigroup

Price Call: BUY

Target Price: 2.75

Citigroup upgraded palm oil firm Wilmar International to ’buy’ from ’neutral’, citing cheap valuations but cut its target price to $4.80 from $5.30 to reflect lower 2012 earnings.

“While there may be one more choppy quarter to go in this cycle, the worst of the negative revisions cycle should be over by the second quarter,” it said in a report.

Wilmar’s earnings are expected to show some recovery in the second half, and its oilseeds processing margins should also improve, Citi said.

At 12:09 p.m., shares of Wilmar were down 0.8%t at $3.58, and have lost 28.4%t since the start of the year, versus the Straits Times Index’s 11%t gain.

Olam’s shares rose 1.4%t to $1.86, but have fallen 12.7%t this year.

The broker also cut its target price for Olam International to $2.75 from $3.10, citing growing competition in the sector and lower return on equity expectations due to a longer gestation phase for its assets.

Noble Group remains Citi’s top pick among Singapore trading companies, and it has a ’buy’ rating and target price of $1.68 on the commodity company.