MARKET PULSE: Oil & Gas Strategy, UE E&C, Pacific Andes (03 Dec 2012)

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.49

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.84

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.70

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.28

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.68

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.143

MARKET PULSE: Oil & Gas Strategy, UE E&C, Pacific Andes

03 Dec 2012

KEY IDEA Oil and Gas: Always a vital resource, always returns into favour Summary: The FTSE Oil and Gas index delivered a strong performance in the first quarter of the year and held steady before slipping in Apr. From mid Jun, however, the higher beta index recovered on hopes that central banks would step up efforts to bolster the global economy injected optimism in the markets. Almost like a mirror image, the index lost steam in Oct before embarking on a recovery again, and we note that despite short to medium term fluctuations, investors who kept the faith during periods of uncertainty were rewarded as the sector would always return into favour. A focused stock-picking strategy would have fared relatively well, and we advocate a similar style in 2013, overweighting companies that are operating in sub-sectors with more favourable demand-supply dynamics. Going into 2013, we remain OVERWEIGHT on the oil and gas sector, preferring Keppel Corporation [BUY, FV: S$12.49], Sembcorp Marine [BUY, FV: S$5.84], Ezion Holdings [BUY, FV: S$1.70] and Nam Cheong Ltd [BUY, FV: S$0.28]. (Low Pei Han, Chia Jiunyang) MORE REPORTS UE E&C: Mixed outlook in 2013 Summary: Going into 2013, we expect the outlook for UE E&C to be fairly mixed. While the group has a strong order-book (estimated S$400m) and a good pipeline of residential development projects, it also faces increasing risks from a tighter labour market and a potential EC glut. As the government tightens the foreign labour supply, the group may have to grapple with higher manpower costs, resulting in lower profit margins. The EC market could also be facing a potential supply glut as the government intends to roll out a record number of EC sites. In addition, the government may introduce measures to rein in EC prices. Meanwhile, we note that UE E&C's share price has risen close to our target price of S$0.68. Given the limited upside, we downgrade to HOLDwith an unchanged fair value estimate. (Chia Jiunyang) Pacific Andes: Clarification on the FAS issue Summary: Following certain media report that Pacific Andes International Holdings (PAIH) and subsidiaries have gained Russian fishing assets without the relevant approval, the group has issued a joint announcement. In it, it states that "it does not own any fishing quotas in Russian waters" and "believes that the group's supply of fish is in compliance with existing Russian law". However, we have also spoken to management to get further clarity. The group has not received any official notification from the authority, but is planning to set up a meeting to get further clarification. It also reiterated that there is no change to its current operations. However, in the worst case scenario, and if they are not permitted to get fish from there, this could result in a premature termination of its prepayment contracts, and the counterparties will have to refund the investments back to the group. Pending official clarity on this issue, we expect PARD's shares to remain under pressure as fishing forms a critical part of its operations. While we have a medium-term HOLD rating on this stock and S$0.143 fair value, this uncertainty is likely to cap its price performance. (Carmen Lee)

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

NEWS HEADLINES - US stocks were little changed on Friday, amid the continuing political debate over how to avoid the fiscal cliff. Senior Republican John Boehner said the budget talks were at a 'stalemate'. The Dow, S&P 500 Index and Nasdaq all ended flat, at 13,025.58, 1,416.18 and 3,010.24, respectively. - China's manufacturing sector expanded in Nov at the fastest pace in seven months, after the PMI reached 50.6, though slightly below economists' forecasts, but still up from Oct's 50.2 reading - Singapore's 2012 GDP growth "may well be lower" than the Trade and Industry Ministry's latest estimate of 1.5%, Prime Minister Lee Hsien Loong said yesterday, adding that growth of 2-3% a year would be considered good growth in future. - Joyas International Holdings expects a loss for 2012 due mainly to weak sales and margins in its main markets of US and Europe, possible restructuring costs and provisions due to downsizing of its metal gifts and jewellery business.

MARKET PULSE: KepCorp, Mapletree Log, Pacific Andes, Marco Polo Marine (27 Nov 2012)

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.49

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.25

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.143

Stock Name: Marco Polo
Company Name: MARCO POLO MARINE LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.53

MARKET PULSE: KepCorp, Mapletree Log, Pacific Andes, Marco Polo Marine

27 Nov 2012

KEY IDEA Keppel Corporation: Order flows to continue in 2013 In our year-end report on Keppel Corporation (KEP) last year, we highlighted that order flows for jack-up rigs would slow while prospects for semi-submersible rigs look increasingly brighter. The year played out as expected, with the group securing three jack-up rigs and seven semi-sub orders so far this year. This has been a front-end loaded year due to property, while O&M margins continued to normalize. Meanwhile KEP has started to improve the competencies and productivity of its regional satellite yards to meet heavier workload requirements. The group's net order book stood at S$13.1b as at end Sep with deliveries extending to 2019. We roll forward our valuations to FY13 earnings in which we are expecting lower operating margins mainly due to the O&M segment and comparatively lower property earnings contribution; as such, our fair value estimate slips from S$13.34 to S$12.49. Maintain BUY. (Low Pei Han) MORE REPORTS Mapletree Logistics Trust: Increasing presence in China Mapletree Logistics Trust (MLT) recently announced its intention to acquire Mapletree Wuxi Logistics Park in China from its Sponsor. The purchase consideration of RMB116m was at a 2.5% discount to the average valuation of RMB119m by two independent valuers. Management guided that the acquisition is expected to be accretive at the DPU level, with an initial NPI yield of 8.0%. This is higher than the implied yield of 6.0% for MLT's existing China portfolio. Separately, MLT also updated that the divestment of 30 Woodlands Loop in Singapore to Accenovate Engineering Pte Ltd will not proceed. This was because the buyer's application to purchase the property was not approved by JTC Corporation as it did not meet its evaluation criteria. We have earlier assumed the divestment to be completed by Feb 2013, as previously guided by MLT. We now factor the China warehouse acquisition into our forecasts and reverse the divestment of 30 Woodlands Loop as the sale will not be completed. Accordingly, our fair value inches up slightly from S$1.24 to S$1.25. We maintain BUYon MLT. (Kevin Tan) Pacific Andes: Below expectations 4Q Pacific Andes Resources Development (PARD) delivered a disappointing set of 4Q results, dragged down by lower earnings from China Fishery Group (CFG). Net earnings plunged to HK$8.9m, down from HK$146.1m in 3Q12. As a result of this, dividend per share was slashed from 1.08 S cents (which traditionally accounted for about one-third of its earnings) to 0.3 S cent (14.5% of earnings). Outlook is muted, and management is exploring new growth areas. While the Supply Chain Management (SCM) operation is still relative stable, the fishing operation appears to be under pressure. Overall, in view of the weaker outlook, we have cut our estimates for FY13 from HK$839m to HK$638m. In addition, we have also dropped our DPS projection to be the same as this year's payout at 0.3 S cent. Using the same valuation peg, but moving to blended FY13/14 earnings, we dropped our fair value estimate from 17.8 cents to 14.3 cents. Downgrade to HOLD. (Carmen Lee)

Marco Polo Marine: 4QFY12 results in line with expectations Marco Polo Marine (MPM) reported a 3% YoY fall in revenue to S$19.8m and a 10% increase in net profit to S$3.9m in 4Q12, bringing full year revenue and net profit to S$89.8m and S$21.3m, respectively. Results were in line with our expectations; full year net profit was exactly what we had forecasted earlier. Gross profit margin was 32.5% in FY12 vs 28.1% in FY11, mainly due to ship repair which performed well in the year. The group continues to receive enquiries for its ship building, repair and conversion services. Pending a briefing later in the afternoon, we maintain our BUY rating but put our fair value estimate of S$0.53 under review. (Low Pei Han) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks finished mostly lower on Monday, with the S&P 500 Index snapping its winning streak, as lawmakers prepared to debate the fiscal cliff. The Dow fell 0.3% to 12,967.37, while the S&P 500 Index slid 0.2% to 1,406.29. Only the Nasdaq ended higher, rising 0.3% to 2,976.78. - Straits Trading Co has offered to buy 23.6% of WBL Corp for S$218m, raising its stake in the firm to 40.6%. If successful, the deal would trigger a mandatory offer to buy the remaining WBL shares for S$3.41 in cash or 1.07 new Straits Trading shares each. - BRC Asia's FY12 PATMI rose 9% to S$16.5m, on the back of a 37% increase in revenue to S$388m. Sales volume was higher due to buoyant construction activities in Singapore. - Rising manpower costs have hit businesses hard, with construction firms suffering the most, a survey of over 10,000 SMEs in Singapore showed. Overall, 72% of the SMEs polled cited high labour costs as the main reason for their eroding profits. High material costs and rising rental costs were also blamed.

Pacific Andes Resources Developments rated 'buy' by OCBC

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

Research House: OCBC

Price Call: BUY

Target Price: 0.178

OCBC Investment Research in a May 14 research report says: "Revenue grew 35% to HK$3,320.5 million. Net earnings improved 23% y-o-y to HK$333.0 million and also higher than our estimates. This gives 1H net earnings of HK$472.6 million, or 65% of our full year estimates.

"The group attributed the better performance to both its core businesses of frozen fish SCM as well as better high revenue from its fishery and fish supply business. The key markets are China (accounting for 69% of sales), Africa (13%), East Asia (9%) and Europe (8%).

"We have adjusted our earnings for a better than expected 2Q, raising our FY2012 earnings from HK$731 million to HK$791 million. Using the same 6.5x earnings peg and adjusting for the rights issue, our fair value estimate for the stock is 17.8 cents. MAINTAIN BUY."

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

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

Research House: OCBC

Price Call: BUY

Target Price: 0.178

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.80

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.70

Stock Name: BreadTalk
Company Name: BREADTALK GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.57

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

14 May 2012

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

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

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

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

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 4.30

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 10.80

Stock Name: OKP
Company Name: OKP HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.53

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.19

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

Research House: OCBC

Price Call: BUY

Target Price: 0.317

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

11 May 2012

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

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

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

Pacific Andes (Holdings) rated 'hold' by DBS

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

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.16

DBS Vickers Securities in a Mar 8 research report says: "The group proposed a 1-for-2 renounceable under-written rights issue at 14 cents per rights share to raise c.S$220 million net proceeds.

"Purpose of the rights issue is to enhance its financial position, and for working capital and general corporate purposes, which we feel are vague explanations. This will be the third rights issue since 2007, and will probably not go down well for investors, in our view. We have not factored in potential dilution from the rights issue.

"Based on our proforma estimates, the rights issue could dilute our target price to c.16 cents, still based on 5.5x FY12F PE. We believe management has inorganic growth plans on the cards and the group may be looking to increase its stake in Tassal Group. MAINTAIN HOLD."

Pacific Andes rated 'hold' by DBS

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

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.23

DBS Vickers Securities in a Nov 29 research report says: "Net profit of HK$623 million was below our forecast of HK$721 million due to one-off expense of HK$116 million for early repayment of debt at China Fishery Group (CFG).

"On a normalised basis, net profit of HK$699 million was also below our forecast and lower than FY2010's core earnings of HK$796 million. Revenue was 30% higher at HK$9.7 billion, driven by 35% growth in Supply Chain Management (SCM) to HK$4.4 billion and 27% rise at CFG to HK$5.3 billion.

"PAH has declared a dividend of 1.08 cents per share, translating to 5% dividend yield. PAH currently trades at 5.1x FY2012F earnings. FY2012F earnings lowered by 8% as we are cautious on CFG. Our target price of 23 cents values the stock at 5.5x prospective earnings or -0.5 std deviation. MAINTAIN HOLD."

Pacific Andes target cut to $0.263 by OCBC

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

Research House: OCBC

Price Call: BUY

Target Price: 0.263

OCBC Investment Research has cut its target price for Singapore-listed frozen fish supplier Pacific Andes Resources Development to $0.263 from $0.344 and kept its buy rating.

Pacific Andes’ full-year earnings, excluding a one-time charge for the early redemption of its sister firm China Fishery’s senior notes, was still lower than expectations due to a fall in gross profit margin to 21.5%.

OCBC has cut its fiscal 2012 earnings forecast by 17.6% to HK$705 million ($118 million), citing deteriorating outlook for the global economy and muted demand.

“While fish demand is fairly resilient, we expect current weak market conditions to translate into lower average selling prices later on,” said OCBC in a report.

At 11:11 a.m., shares of Pacific Andes were flat at $0.205, and have fallen 43% since the start of the year.

Pac Andes - DBSV upgrades Pacific Andes to Buy from Hold

Stock Name: Pac Andes
Company Name: PACIFIC ANDES RESOURCES DEVLTD
Research House: DBS Vickers

DBS Vickers upgrades Pacific Andes Resources (P11.SG) to Buy from Hold and raises its target price to $0.48 from $0.37 on news its subsidiary China Fishery (B0Z.SG) is seeking a dual-listing in Hong Kong by offering up to 200 million new shares.



“With the potential funds raised of (about) U$350 million, we believe CFG could be aggressively looking for acquisition of more quotas/fishing companies.”

DBS says it’s not factored in the potential dilution nor earnings accretion from the deployment of funds, but a successful dual-listing of CFG “would highlight the market value of PAH’s (about) 56% effective holding in CFH.



Currently, the market value of PAH’s stake in CFG is (about) $1.27 billion, which is a 30% premium to its own market cap.” The house’s new target is pegged to 9x FY11F P/E, a 30% discount to CFG’s target P/E and a 20% discount to peers’ average. Pacific Andes shares are +2.9% at $0.355.





 

Pac Andes - Pacific Andes Resources started at Outperform by Standard Chartered

Stock Name: Pac Andes
Company Name: PACIFIC ANDES RESOURCES DEVLTD
Research House: StanChart

Standard Chartered starts Pacific Andes Resources Development (P11.SG) at Outperform with $0.47 sum-of-parts target price.



Expects steady recurrent earnings from supply chain management business, with unit China Fishery’s (B0Z.SG) strong growth momentum, margins underpinning group prospects.

Forecasts 13% earnings CAGR over 2010-2013 for frozen fish supplier; “PARD provides a cheap proxy for the strong growth momentum of China Fishery and rising domestic consumption in China.”



Tips 5%-6% annual average profit growth in next 3 years for supply chain management arm, which accounts for 43% of group revenue. Shares +1.5% at $0.335.

Pac Andes - Pacific Andes Resources target raised to $0.50 by CIMB

Stock Name: Pac Andes
Company Name: PACIFIC ANDES RESOURCES DEVLTD
Research House: CIMB

CIMB raises Pacific Andes Resources Development (P11.SG) target to $0.50 from $0.36, maintains Outperform call.



CIMB says 4Q10 core net profit of HK$110 million ($18.6 million) (down 8% on-year) was below expectations, forming 14% of FY10 estimate, FY10 core net profit of HK$771 million (+8% on-year) made up 96% of FY10 estimate.

“The variance came from lower SCM selling prices, and lower-than-forecast trawling revenue and fishmeal sales volume.”



However, raises FY11-12 EPS estimates by 2%-3% on higher profit assumptions for China Fishery (B0Z.SG). SOTP target raised following higher target for CFG ($2.55 from $1.75).



“We continue to expect catalysts from announcements of earnings-accretive expansion/acquisitions at CFG.” Shares flat at $0.335.