SG: MARKET PULSE: STX OSV, Midas, Ezra (15 Mar 2013)

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.52

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.595

Stock Name: Ezra
Company Name: EZRA HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.30

MARKET PULSE: STX OSV, Midas, Ezra

15 Mar 2013

KEY IDEA STX OSV: What's next after offer closing? At the close of its mandatory offer for STX OSV shares on 13 Mar 2013, Fincantieri received only 4.88% valid acceptances, bringing its total shareholdings to 55.63% (pre-offer: 50.75%). The low acceptance level is unsurprising given that the Board of Directors has recommended shareholders to reject Fincantieri's offer as it is not compelling enough. Looking ahead, we believe there will be better clarity in terms of corporate identity, board leadership and senior management. Fincantieri has also stated that it has no intention to (i) introduce any major changes to STX OSV, (ii) re-deploy the fixed assets or (iii) discontinue the employment of its employees. Maintain BUY with unchanged S$1.52 fair value estimate. (Chia Jiunyang) MORE REPORTS Midas Holdings: Seeking to grow its order book We view China's latest railway reforms as a mid-to-long term positive for the sector, which would likely benefit industry suppliers such as Midas Holdings (Midas). While we are cognisant that there may be some near-term uncertainties over the timeline of new high-speed railway (HSR) contract tenders, we note that the Chinese government has reaffirmed its railway investment targets for 2013. Its 12thFive-Year Plan for the sector also remains unchanged. Meanwhile, Midas recently won CNY109.6m worth of metro contracts in China. We expect management to continue its drive to secure more orders from the metro/subway, international rail transport, power and industrial machinery industries to act as a near-term buffer for the lack of clarity on when the resumption of HSR contract tenders would materialise. Reiterate BUY and S$0.595 fair value estimate on Midas, still pegged to 1.2x FY13F P/B. (Wong Teck Ching Andy) Ezra Holdings: Wins two contracts for the Norwegian sea Ezra Holdings (Ezra) announced that its subsea services division, EMAS AMC, has won an engineering, procurement, construction and installation (EPCI) contract valued at about US$165 million from Det norske oljeselskap ASA. This is the same customer that awarded Sembcorp Marine a S$900m EPC contract for an offshore platform topside in Feb this year. Ezra will undertake rigid pipe-lay and related subsea work, in the Ivar Aasen field in the Norwegian North Sea. Project management and engineering work will start immediately with offshore activities in 2015. Meanwhile EMAS AMC has also won a contract (value undisclosed) from Statoil for the transport and installation of subsea templates for the Aasta Hansteen field in the Norwegian Sea. Offshore transport and installation will take place in 2015. Pending more details on the second contract, we maintain our HOLD rating and fair value estimate of S$1.30 on Ezra. (Low Pei Han)

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

NEWS HEADLINES - Sunright Limited posted a net loss of S$3.39m for the half year ended Jan 31, 2013, compared to net profit of S$1.37m a year ago. - Lonza Group Ltd is looking to raise CHF300m (S$395m) via a six-year straight bond issue with an annual 1.75% coupon rate. - Koyo International Ltd announced that it has won two mechanical and electrical engineering contracts worth S$23.7m. - National Development Minister Khaw Boon Wan said that restrictions on public housing that could make HDB flats more affordable in the future would only apply to new buyers, not existing flat owners. - The government will stop tightening the foreign workers supply only if three goals are met: foreign presence in the labour pool is capped at around a third; productivity grows 2-3% a year; and when Singaporeans' wages improve. - China's Parliament formally elected Xi Jinping as its new president yesterday, completing the country's second orderly political succession since the Communist Party took power in 1949.

MARKET PULSE: Tat Hong, Raffles Medical, STX OSV (14 Mar 2013)

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

Research House: OCBC

Price Call: BUY

Target Price: 1.75

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: HOLD

Target Price: 3.01

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.52

MARKET PULSE: Tat Hong, Raffles Medical, STX OSV

14 Mar 2013

KEY IDEA Tat Hong Holdings: Outlook remains positive Tat Hong's PATMI grew by 63% to S$42m in FY12 (financial year ended Mar 2012) and is expected to increase by a further 65% to S$70m in FY13F. The sharp improvements were mainly due to improved crane utilization and higher charter rates. With current crane utilization at around 70% levels, we think that FY14-15F PATMI growth will moderate to around 10-30%, mainly driven by crane fleet expansion. On this point, we note that Tat Hong had completed a share placement of S$82m (in Sep-2012), half of which was earmarked for fleet expansion. We remain positive on the group's outlook over the medium term and keep our BUY rating and S$1.75 fair value estimate unchanged. Risks to our projection include (i) a sharp slowdown in its Australia business and (ii) unexpected delays in Chinese infrastructure projects. (Chia Jiunyang) MORE REPORTS Raffles Medical Group: Unsuccessful in Hong Kong land tender Raffles Medical Group (RMG) announced last evening that it was not successful in its tender for the site at Aberdeen Inland Lot No. 458 in Wong Chuk Hang, Hong Kong, for the development of a private hospital. We note from Hong Kong's Food and Health Bureau's announcement that the site was awarded to GHK Hospital Limited, a 60%-owned subsidiary of Parkway HK Holdings, which in turn is a wholly-owned indirect subsidiary of IHH Healthcare Berhad [NON-RATED]. The winning bid for the land premium was HKD1.688b (out of three bids). No details were disclosed about RMG's bid amount. Total capex for the project would be ~HKD5b (inclusive of the land cost), according to IHH. This is a second setback for RMG recently, as it had also failed to obtain regulatory approval for its first application for the change of use of its commercial podium at 30 Bideford Road for medical clinics (announced on 17 Oct 2012). However, RMG has since resubmitted a second application (around Dec 2012) and is currently awaiting a reply from the relevant authorities. It is also exploring a proposed development of an integrated international hospital in Shenzhen, China, via a non-binding Letter of Intent with a subsidiary of China Merchants Group. Maintain HOLDand S$3.01 fair value estimate on RMG, pegged to 27x FY13F EPS. (Wong Teck Ching Andy) STX OSV: Fincantieri owns 55.6% of STX OSV at close of offer At the close of its mandatory general offer yesterday, Italian shipbuilder Fincantieri received valid acceptance of only 4.9%, bringing its shareholding in STX OSV to 55.6% (previously 50.75%). This development is unsurprising to us given that the board of directors has recommended shareholders to reject the S$1.22 offer as it is not compelling. We currently have a BUY rating with a S$1.52 fair value estimate on the stock. (Chia Jiunyang)

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

NEWS HEADLINES - IHH Healthcare's 60%-owned GHK Hospital has purchased a land parcel in Hong Kong for HK$1.69b (S$271m) to build and run a private hospital. - Datapulse Technology's net profit fell 12.8% YoY to S$1.9m for 2Q ended Jan 31. - Certificate of entitlement (COE) premiums for big cars slumped drastically in the latest round of bidding, emerging lower than small cars. - A mega passenger terminal could be built on a site in Changi East, said Minister of State for Transport Josephine Teo yesterday. - Singapore'a Transport Minister said that competition among public transport operators might heat up in the future, with foreign firms entering the fray. - US stocks edged up on Wednesday, with the Dow rising for the ninth straight session to another record, buoyed by surprisingly strong retail sales.

MARKET PULSE: Nam Cheong, Breadtalk, STX OSV, CSE Global, Dyna-Mac, ECS, Petra Foods (27 Feb 2013)

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.30

Stock Name: BreadTalk
Company Name: BREADTALK GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.77

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.52

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.99

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.57

Stock Name: ECS
Company Name: ECS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.56

Stock Name: Petra
Company Name: PETRA FOODS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.57

MARKET PULSE: Nam Cheong, Breadtalk, STX OSV, CSE Global, Dyna-Mac, ECS, Petra Foods

27 Feb 2013

KEY IDEA Nam Cheong Limited: A strong quarter to finish FY12 Nam Cheong Limited reported a strong set of 4Q12 results with revenue and net profit increasing by 172% and 87% to MYR 379m and MYR 49m respectively. On a full-year basis, revenue climbed 45% to MYR 877m, while net profit increased 47% to MYR 137m. Operating margin declined slightly to 16.4% compared to 17.3% a year ago, partly due to lower margins from its vessel chartering division. Several vessels were demobilized upon the charter fulfillment and later re-deployed for ensuing contracts. The shipbuilding business achieved significant growth with revenue improving to MYR 839m (+49%) and gross profit increasing to MYR 164m (+56%). The group recommended a final dividend of 0.5 S cts for FY12 (FY11: 0.2 S cts), representing a payout of 19.2%. Maintain BUYwith unchanged fair value estimate of S$0.30. (Chia Jiunyang) MORE REPORTS BreadTalk Group: Margin pressures as expected BreadTalk Group registered a 19.1% YoY and 5.7% increase in 4Q12 revenue and operating profit to S$119.7m and S$6.5m respectively on the back of higher same-store sales across all business segments. Although these results exceeded our forecast, the group's operating and net profit margins declined as expected following greater cost pressures. In line with its expansion phase, BreadTalk declared a lower final dividend to bring the total dividends declared in FY12 to 1.3 S cents (FY11: 1.5 S cents). Going forward, we adjusted our FY13/14 forecasts upwards to account for full year contributions from new stores but remained lukewarm on possible margin improvements as the group's continued expansion push makes the scenario unlikely. Therefore, we lower our rolling 12-month EPS peg to 15.5x (from 19x) but keep our fair value estimate at S$0.77. Maintain HOLD. (Lim Siyi) STX OSV: FY12 net profit down 45% STX OSV reported a weak set of results with FY12 net profit coming in at NOK902m, 13% below our expectations and 15% below consensus. 4Q revenue and net profit were NOK2.5b (-18.8%) and NOK124m (-80.6%), respectively. Lower-than-expected order intake resulted in temporarily lower utilizations in some yards in Norway. Its Niteroi shipyard in Brazil also impacted the group's performance negatively. Meanwhile, the vessel market appears to be improving with STX OSV clinching three OSCV contracts worth NOK2-2.8b since the beginning of 2013. Assuming a stronger order intake in 2013 (compared to 2012's NOK9.5b) and barring a serious deterioration in its Brazil operations, the group should see improved utilization and sustained level of performance across 2013-14. Maintain BUY with unchanged fair value estimate of S$1.52. (Chia Jiunyang) CSE Global: Net profit doubled to S$56m CSE Global reported results which were in line with expectations as FY12 net profit doubled to S$56m versus our estimate of S$57m. The improvement was partly due disposal gains from its investment in eBworx Berhad. The group has recommended a final dividend of 2.75 Scts for FY12 (FY11: 2.0 Scts). We currently have a BUY rating with a fair value estimate of S$0.99, and will provide further updates after its briefing later. (Chia Jiunyang) Dyna-Mac Holdings: FY12 net profit up 56.5% Dyna-Mac Holdings' FY12 net profit came in at S$28.4m (+56.5%) and was in line with our estimate of S$28.0m. In separate SGX announcements, the group disclosed that its COO John Varghese will be re-designated as Chief Corporate and Technical Officer "in line with his intention to take on a less demanding role due to his age and health". John will be succeeded by Mr. Lim Tjew Yok, the Chief Technical Officer and an Executive Director of the company. We will be attending its briefing later and will provide further updates accordingly. In the meantime, do note that we have a BUY rating with S$0.57 fair value estimate. (Chia Jiunyang) ECS Holdings: 4Q12 core PATMI misses expectations ECS Holdings (ECS) reported a 21.4% YoY dip in its 4Q12 PATMI to S$7.1m despite a 10.5% increase in revenue to S$1,021.1m. Excluding forex and other exceptional items, we estimate that core earnings would have decreased 16.4% YoY to S$6.6m. This is below our expectations due largely to a 1.1ppt slide in gross margin to 3.4%. For FY12, revenue inched 1.0% higher to S$3,643.7m, forming 102.0% of our FY12 forecast. Estimated core PATMI declined 18.4% (reported PATMI fell 24.4%) to S$29.4m, which missed our estimate by 5.8%. On a positive note, a first and final dividend of S$0.022 per share was declared, similar to FY11, but above our S$0.017 per share forecast. This translates into a yield of 4.2%. Looking ahead, ECS aims to broaden its range of distribution products and services to accommodate the shift in consumer preference from PCs to mobile devices, while it is also looking to develop its own cloud-based solutions. We will provide more details after the analyst briefing. We place our Buy rating and S$0.56 fair value estimate under reviewgiven this set of weaker-than-expected results and ECS's 14.1% YTD share price appreciation. (Wong Teck Ching Andy) Petra Foods: Branded Division continues strong growth Petra Foods' 4Q12 results registered a net loss of US$16.7m that came in below our expectations following continued weaknesses in its Cocoa Ingredients business. Double-digit net profit growth (+10.4% YoY to US$14.7m) in the Branded Consumer division was offset by a sizeable loss of US$31.4m from the Cocoa Ingredients division during the same period. This brought FY12 net profit to US$25.8m - a decline of 57.3% YoY from US$60.5m. However, excluding the soon-to-be-sold Cocoa Ingredients division, Petra would have registered a 38.8% increase in its FY12 bottom-line to US$54.5m on a 13.8% YoY improvement in revenue to US$477.7m. Pending a briefing with management later in the morning, we place our fair value estimate of S$3.57 under review but maintain our HOLD rating on the counter. (Lim Siyi)

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

NEWS HEADLINES - US stocks climbed Tuesday with positive housing data and comments by Fed Chairman Bernanke that the benefits of quantitative easing are clear. The Dow rose 0.8% to 13,900.13. - Keppel Corporation's O&M arm has won two contracts worth S$200m from SBM Offshore and MODEC and Toyo Offshore Production Systems (MTOPS). - Far East Orchard, formerly known as Orchard Parade Holdings, posted a 53% increase in FY12 net profit to S$190.8m, chiefly due to other gains (net) of S$121.5m. - Hotel Properties' FY12 PATMI jumped 84% to S$129.7m. Revenue rose 10% to S$542.8m. - JB Foods' 4Q12 PATMI fell 55% YoY to RM7.2m despite revenue climbing 13% to RM194.8m.

MARKET PULSE: Tat Hong, SingTel, Starhill Global, STX OSV (15 Feb 2013)

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

Research House: OCBC

Price Call: BUY

Target Price: 1.75

Stock Name: SingTel
Company Name: SINGTEL

Research House: OCBC

Price Call: BUY

Target Price: 3.68

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 0.95

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.52

MARKET PULSE: Tat Hong, SingTel, Starhill Global, STX OSV

15 Feb 2013

KEY IDEA Tat Hong Holdings: Another strong quarter Summary: Tat Hong Holdings (Tat Hong) reported a fairly strong set of 3Q13 results with net profit attributable to shareholders surging by 37% YoY to S$17.8m. Gross margin increased slightly to 35.9% (3Q12: 34.4%) due to higher contribution from Crane Rental and Tower Rental segments which yielded higher margins compared to Distribution. Looking ahead, the crane divisions are expected to continue their strong momentums with the roll-out of infrastructure projects across the region. However, Distribution and General Equipment Rental may slow due to weaker demand in Australia. Overall, we are still positive on Tat Hong and raise our fair value estimate to S$1.75 (previously S$1.70) as we roll forward our projections to FY13/14F. Maintain BUY. (Chia Jiunyang) MORE REPORTS SingTel: Stable 3QFY13 results Summary: SingTel saw its 3QFY13 group revenue dipping 4.8% YoY to S$4597m, and while EBITDA rose 0.5% to S$1262m, net profit fell 8.3% to S$827m (mainly due to exceptional loss of S$67m). However, excluding exceptional items, underlying net profit was down 2.3% at S$874m. 9MFY13 revenue fell 2.4% to S$13702m, meeting 73% of our FY13 forecast, while net profit slipped 2.2% to S$2640m; core earnings was down 1.6% at S$2610m, or 69% of full-year estimate. SingTel has kept its guidance for FY13, which we have already captured in our forecast. As such, we would not be making any changes. However, in line of the recent recovery in the price of its listed associates, our SOTP-based fair value improves from S$3.53 to S$3.68. We also maintain our BUY rating on the stock. (Carey Wong) Starhill Global REIT: 10% rent increase for Toshin master lease Summary: Starhill Global REIT (SGREIT) has secured a 10.0% increase in base rent for Toshin master lease at Ngee Ann City, following the completion of the rent review process yesterday. The new rate was based on the average of three market rental valuations undertaken by independent licensed valuers, in accordance with the Court of Appeal's directions, and will be retrospectively applied for the term commencing 8 Jun 2011. Assuming the accumulated rental arrears owing as a result of the rental increase from 8 Jun 2011 to 31 Dec 2012 were paid in FY12 (after deducting expenses), management estimates an increase of 0.19 S cents (+4.3%) in its FY12 DPU. SGREIT intends to distribute substantially the net arrears received (~S$3.8m) from Toshin in 1Q13. This will be on top of the regular distributable income generated for the quarter. We expect the market to react favourably to this news. Maintain BUY on SGREIT but place our fair value of S$0.95 under review as we incorporate the rental and DPU increase in our forecasts. (Kevin Tan) STX OSV: Three new OSCV contracts worth US$350-500m Summary: STX OSV announced that it has secured contracts for three Offshore Subsea Construction Vessels (OSCVs). We estimate the total value to be around NOK 2b to 2.8b (or US$350-500m). The three vessels are for Solstad Offshore, Farstad Shipping and DOF Subsea Group. They will be built in Norway and scheduled for deliveries in 2014 and 2015. As the group is expected to report its 4Q12 results soon, we put off adjusting our estimates and maintain our BUY rating with S$1.52 fair value estimate. (Chia Jiunyang)

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

NEWS HEADLINES - US stocks finished mostly higher on Thurs after another day of tight trading, but blue chips turned in their second day of losses, as investors mulled mixed economic data on a banner day for mergers and acquisitions. - China Minzhong Food Corporation posted a 23.6% YoY increase in profit to CNY215.8m in 2QFY13. - Cordlife Group Limited's 2QFY13 net profit soared 192.7% YoY to S$5.6m, as revenue climbed 23.9% to S$8.8m. - SMRT CEO Desmond Kuek has unveiled a strategic blueprint for the public transport operator, focusing on operational performance and putting commuters first. - Economists say more foreign worker curbs may be announced as soon as this month when the government presents its Budget for the new fiscal year on Feb 25.

STX OSV stake sale removes overhang: OSK-DMG

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OSK-DMG

Price Call: BUY

Target Price: 2.05

Fincantieri’s price for a 50.75% stake of STX OSV (MS7.SG) is “somewhat low” considering the Singapore-listed company’s relatively strong balance sheet, valuing the stock at 7X FY13 P/E, OSK-DMG says.

“This depressed sale price could be primarily driven by the desperation of the STX Group to sell its assets to pare down debts.”

While Fincantieri has lined up finances to acquire the rest of STX OSV, OSK-DMG doesn’t expect the general offer to succeed, noting the $1.22/share price is below the current share price, with the offer likely merely aimed at satisfying Singapore takeover rules; “we view the offer as unattractive to minority holders.”

It adds, Fincantieri might not get the 90% acceptance level needed to take the company private, noting Och-Ziff holds 12%. But it adds, “the change in major shareholder could remove the overhang on the stock and lead to rerating.”

It keeps a Buy call with $2.05 target. It notes STX Group is also looking to sell its STX Pan Ocean (GZ9.SG) holding. The stock is down 6.1% at $1.315. STX Pan Ocean is down 6.2% at $4.37.

Fincantieri makes low-ball bid for STX OSV: CIMB

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 1.47

Fincantieri’s $1.22/share price for a 50.75% STX OSV (MS7.SG) stake is a low-ball offer, says CIMB.

“We were surprised at the low sale price, which values STX OSV at 6.5x 2013 P/E and 2.2x 2012 P/BV. Though we understand Korean parent company STX Corp.’s urgency to restructure its balance sheet, the sale price undervalues STX OSV.”

While Fincantieri doesn’t intend to maintain STX OSV’s listing status, CIMB expects the stock to remain listed, given the low price; it notes Och-Ziff’s average cost for its 12% stake was around $1.33/share.

“Though STX OSV could succumb to some near-term selling pressure, we believe its fundamentals could eventually provide support at $1.30-$1.40.”

It keeps a Neutral call with $1.47 target, implying 7.8x 2013 P/E and 2.7x 2013 P/BV. The stock is down 6.4% at $1.31.

MARKET PULSE: Technology Sector, STX OSV (21 Dec 2012)

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 9.22

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.69

Dear TRs,

Please note that this is our last Market Pulse report of 2012.

Have a merry Christmas and a great 2013 ahead!

Regards,
The team at OIR

MARKET PULSE: Technology Sector, STX OSV

21 Dec 2012

KEY IDEA Technology Sector: Silver lining but dark clouds remain 2012 was a challenging year for the cyclical tech sector due to weaknesses in the macroeconomic environment. The situation was exacerbated by rising cost pressures, resulting in operating deleverage and margin compression. We believe that the visibility and outlook for the tech sector will remain cloudy in the near future, although pockets of strength have emerged recently. Moving into 2013, we maintain our NEUTRALrating on the tech sector. We expect industry conditions to pick up more firmly only in 2H13, while ongoing vagaries in the macroeconomic landscape could continue to weigh on business sentiment and sector valuations in the near-term, in our view. We recommend Venture Corporation [BUY; FV: S$9.22] as our top tech sector pick for 2013, as we think it is a compelling investment, especially for investors seeking cyclical exposure and yield plays. (Wong Teck Ching Andy) MORE REPORTS STX OSV: Fincantieri acquires a 50.75% stake, announces mandatory cash offer Italian shipbuilder Fincantieri announced that it has signed an agreement to acquire a 50.75% stake in STX OSV, from its parent STX Europe, at S$1.22 per share - representing a 12.9% discount to closing price of S$1.40 on 20 Dec 2012. The closing of the acquisition will take place within the first four months of 2013, after certain conditions are satisfied. Once the conditions are satisfied, Fincantieri said that it will launch a mandatory cash offer for the remaining STX OSV shares. We are currently reviewing the terms of the offer and thus put our BUY rating and S$1.69 fair value estimate UNDER REVIEW. (Chia Jiunyang)

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

NEWS HEADLINES - US stocks rose on Thu as Republican House Speaker John Boehner expressed optimism about reaching a budget deal with President Obama. The Dow and the the S&P 500 Index both rose 0.5%, to 13,311.72 and 1,443.69, respectively, while the Nasdaq finished 0.2% higher at 3,050.39. - Sembawang Engineers and Constructors has suspended its listing plans in Singapore due to market conditions and a change in the group's corporate positioning. - Sysma Holdings has agreed to pay S$35m for a private company that owns two plots of land in Serangoon, marking its first foray into property development. - AEM Holdings expects a loss for FY2012 due to a US$2.1m non-cash provision arising from a settlement reached with a customer over a legal dispute. - Healthway Medical Corp has agreed to sell part of its holdings in Healthway Medical Development (HMD) for S$3.5m, reducing its stake from 15% to 14%. The group plans to fully divest its HMD stake eventually, it said.

Citi lowers STX OSV target price

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: Citigroup

Price Call: BUY

Target Price: 1.70

Citigroup cut its target price on STX OSV Holdings to $1.70 from $1.95 and kept its ’buy’ rating, citing lower margin and muted growth expectations over the next two years.

By 12:12 p.m., STX OSV shares were down 1.1% at $1.36, and have gained 17% since the start of the year, compared with the FTSE ST Oil & Gas Index’s 18% rise.

Concerns over the pace of STX OSV’s order wins and margin pressure are likely to weigh on its shares in the near term, Citi said.

However, the brokerage sees an attractive opportunity to buy STX OSV shares due to the recent fall in share price after its third-quarter earnings.

“We believe investors may have taken an overly bearish view and that risks have most likely been mispriced,” said Citi, adding that the decline in third-quarter sales was due mainly to lumpy revenue recognition.

MARKET PULSE: CityDev, KSH, Olam, Swiber, STX OSV, Valuetronics, Viz Branz, Midas, KSE (15 Nov 2012)

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 13.10

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.50

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.80

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.65

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.69

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.20

Stock Name: VizBranz
Company Name: VIZ BRANZ LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.735

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.505

Stock Name: KS Energy
Company Name: KS ENERGY LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.83

MARKET PULSE: CityDev, KSH, Olam, Swiber, STX OSV, Valuetronics, Viz Branz, Midas, KSE

15 Nov 2012

KEY IDEA City Developments Limited: Looking ahead to Redhill launch in 4Q12 CDL reported 3Q12 PATMI of $134.5 which showed a marginal YoY increase (1.8%) over 3Q11. Recognition at development projects kept mostly in pace with the previous quarter and we judge this set of results to be generally in line with expectations. HAUS@SERANGOON GARDEN and Up@Robertson Quay have 86 and 48 units sold to date, respectively. In addition, The Palette and Bartley Residences are over 94% and 92% sold, respectively. Looking ahead to 4Q12, we expect CDL to launch the 508-unit condominium development (the Echelon) near Redhill MRT station and, in 1H13, another 912-unit project in Pasir Ris Grove. Hotel subsidiary M&C reported 3Q12 PATMI of GBP30.7, down 47.5% YoY due to the absence of disposal profit in 3Q11. YTD overall REVPAR was up 4.9%, with a particularly strong showing from London (up 10.2% YoY) from the Olympic games. Maintain BUYwith an unchanged fair value estimate of S$13.10 (15% RNAV disc.). (Eli Lee) MORE REPORTS KSH Holdings: Healthy earnings and dividends growth KSH reported 2QFY13 PATMI of S$9.8m, up a whooping 90% YoY mainly due to increased contributions from the construction business and project recognition from Cityscape@Farrer Park. We judge this set of results to be mostly in line with expectations as 1HFY13 PATMI now made up 46% of our FY13 forecast. We note the pace of profit recognition at Cityscape@Farrer in 2QFY13 (through share of results of associates) was somewhat below expectations - S$2.1m versus an expected S$3.5m-S$4.5m - but this was offset by higher profits from the construction segment. Management also announced an interim dividend of 1.35 S-cents, up 35% from a 1.0 S-cent interim dividend last year. KSH's order book continues to be healthy at S$375m as of end Sep 12, down 10% QoQ versus S$416m as of end Jun 12. Maintain BUY with an unchanged S$0.50 fair value estimate (50% discount to RNAV). (Eli Lee) Olam Int'l: 1QFY13 results mostly in line Olam International Limited (Olam) reported 1QFY13 revenue of S$4689.1m, though up 45% YoY, it was down 9% QoQ; but still met 24% of our full-year forecast. Reported net profit came in at S$43.2m, up 26% YoY but down 61% QoQ. We estimate that core earnings (excluding financial and biological revaluation gains) fell 16% YoY and 18% QoQ to S$28.4m, meeting around 8% of our FY13 estimate; but we still deem its results to be in line as 1Q typically contributes just 5-10% of its full-year earnings due to the unique seasonal pattern of its portfolio. As its results were mostly in line with our forecast, we are keeping our estimates unchanged. As such, our fair value also remains at S$1.80, or 12.5x FY13F EPS. Given the limited upside, we maintain our HOLD rating. (Carey Wong) Swiber Holdings: First dividend since FY05 Summary: Swiber Holdings (Swiber) reported a 92.6% YoY rise in revenue to US$265.3m but saw a 45.8% fall in net profit to US$7.3m in 3Q12, such that 9M12 net profit accounted for about 80% of our full year estimates, within expectations. Gross margin declined from 16.6% in 3Q11 to 14.1% in 3Q12, but was similar to 2Q12's 14.2%. Meanwhile, net debt to equity rose from 0.89x in Jun 2012 to 1.00x in Sep 2012. As of Nov 2012, Swiber's order book stood around US$1.4b vs. US$1.6b as at Aug. The group has also proposed an interim dividend of S$0.01/share. Meanwhile, we would be monitoring the group's operating cashflows. Maintain HOLDwith slightly lower fair value estimate of S$0.65 (prev. S$0.66). (Low Pei Han) STX OSV: Subdued 3Q STX OSV reported a fairly muted set of 3Q12 results that were below ours and the street's expectations. 3Q revenue and net profit to shareholders declined by 27% and 39% YoY to NOK 2.5b and NOK 228m respectively. On a sequential basis, revenue and net profit fell by 26% and 18% respectively. The weaker performance in 3Q12 was mainly due to slower pace of revenue recognition during the tail end of shipbuilding. Its yards reported generally stable operations, but the slow order intake (only NOK 900m in 3Q) may lead to under-utilization in its Norwegian yards in 2013. In view of this and the weaker-than-expected 3Q results, we reduce our fair value estimate to S$1.69 (previously S$2.00), Maintain BUY.(Chia Jiunyang) Valuetronics Holdings: Dearth of near-term catalysts Valuetronics Holdings Limited's (VHL) 2QFY13 PATMI plunged 88.5% YoY to HK$3.3m as it incurred hefty one-off termination expenses and provisions due to the cessation of its Licensing business. Revenue from continued operations was flat at HK$595.5m, or 11.6% below our forecast. However, we estimate that core PATMI came in at HK$31.5m, a 34.1% YoY increase, which exceeded our HK$26.2m projection. Looking ahead, we believe that sales from its largest customer would likely moderate, while there is also a strong sense of caution amongst its major customers. We trim our FY13 and FY14 revenue estimates by 9.7% and 10.6%, but raise our core PATMI forecasts by 8.0% and 6.5%, respectively, on higher margin assumptions. Applying a lower 4x (previously 4.5x) peg and rolling forward our valuations to blended FY13/14F core EPS, our fair value estimate falls from S$0.21 to S$0.20. While estimated 8.9% yield is attractive, we maintain HOLD given the lack of near-term catalysts. (Wong Teck Ching Andy) Viz Branz Limited: Faith will be rewarded Viz Branz (VB) reported a decent 1Q13 performance with continued margin improvements. Although revenue declined slightly, PATMI grew 17.4% YoY to S$4.5m following favourable raw material costs and effective cost control measures. With the performance coming in within our expectations, our FY13 outlook for VB remains unchanged, and we retain our fair value estimate of S$0.74. While there is no update on further share purchases by Lam Soon, we reiterate our optimism that an eventual general offer will materialize in the near-term. Given the recent price correction of the counter - and a supportive price base of S$0.735 from Lam Soon's partial stake purchase - we feel that an investment opportunity has presented itself. With a potential upside of nearly 10%, we upgrade VB to BUY. (Lim Siyi) Midas Holdings: 3Q12 net loss wider than expected Midas Holdings (Midas) reported a 21.8% YoY dip in its 3Q12 revenue to CNY202.7m, which was 6.0% below our projection. As a result of higher operating expenses, finance costs and a share of loss of CNY7.0m from its associated company, Nanjing SR Puzhen Rail Transport, Midas registered a loss before tax of CNY1.6m, which matched our estimate. However, net loss of CNY6.1m (3Q11: CNY27.4m PATMI) came in worse than our CNY1.3m forecast due to higher-than-expected income tax expenses. Midas' net gearing ratio also increased from 2.2% in 3Q11 and 22.5% in 2Q12 to 23.7% in 3Q12 as it increased its borrowings to finance its working capital requirements and capacity expansion plans. We expect this to translate into higher finance costs for the group in 4Q12 and FY13 and will thus adjust our estimates accordingly. More details will be provided after the analyst conference call. We still opine that FY12 would be a non-event for Midas and investors should instead focus on the likelihood of a recovery in its business operations in FY13, in line with the Chinese government's commitment to expand its rail transport system. We maintain our BUYrating but our S$0.505 fair value estimate is under review. (Wong Teck Ching Andy) KS Energy: Another profitable quarter KS Energy (KSE) reported a 21.9% YoY rise in revenue to S$161.3m and a net profit of S$14k in 3Q12 vs net loss of S$11.5m in 3Q11. 9M12 revenue and operating profit accounted for 80% and 73% of our full year estimates. 9M12 net profit was also within expectations, amounting to S$391k vs our full year estimate of a net loss of S$3.5m. Revenue growth was driven by the distribution business in 3Q12, while the drilling segment had a relatively stable quarter. More assets are expected to be deployed over the next 12 months, and we expect the earliest signs of a more significant recovery only in 2Q13. Pending a call with management, we maintain our HOLD rating but put our fair value estimate of S$0.83 under review. (Low Pei Han)

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

NEWS HEADLINES - US stocks slid further on Wednesday as worries about the fiscal cliff continued to weigh heavily on sentiment. The Dow slumped 1.5% to 12,570.95, despite surprisingly good results from Cisco Systems, while the S&P 500 Index fell 1.4% to 1,355.49 and the Nasdaq ended 1.3% lower at 2,846.81. - Otto Marine reported 3Q12 PATMI of US$4.7m, reversing a US$16.2m loss a year earlier. The improvement was supported by an 84% YoY jump in revenue to US$78.4m, with the increase coming mainly from its chartering and subsea services segments.

MARKET PULSE: LMIRT, SIA, Telecoms, STE, STX-OSV, Lian Beng (11 Oct 2012)

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.45

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 10.85

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

Research House: OCBC

Price Call: BUY

Target Price: 3.81

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.00

Stock Name: Lian Beng
Company Name: LIAN BENG GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.47

MARKET PULSE: LMIRT, SIA, Telecoms, STE, STX-OSV, Lian Beng

11 Oct 2012

KEY IDEA Lippo Malls Indonesia Retail Trust: Acquiring four properties Summary: LMIRT has announced the proposed acquisitions of four properties from non-interested parties. Two properties, Palembang Square and Palembang Square extension, would be LMIRT's first malls in Palembang. The third and fourth properties are Tamini Square and Kramat Jati Indah Plaza (KJI), which are located in East Jakarta. All four properties are to be purchased at a discount to book value. Including the aggregate purchase consideration of ~S$180.7m and the acquisition fee payable to the manager, as well as professional fees and other expenses, the total acquisition fee is expected to be S$188.1m. As to be expected, management is proposing to finance the acquisitions from the proceeds raised from the issuance of S$250m worth of notes in early Jul. Incorporating the acquisitions into our model, we maintain our fair value of S$0.45 and our HOLD rating on LMIRT. (Sarah Ong) MORE REPORTS Singapore Airlines: Caution over fuel prices Summary: Despite a reported slowdown in global demand for air transport, Singapore Airlines (SIA) managed to hold its own amidst the challenges, and turn in a decent performance relative to the industry. For the first eight months of the year, passenger demand for SIA was slightly higher on the back of a similar pace of capacity expansion. Although SIA's passenger load factor was slightly lower versus the industry average, it remained within our expectations given SIA's slightly higher capacity base. Going forward, we see capacity management as essential in minimizing downward pressures on passenger yields, especially with the success of SIA's promotional fare strategy. In addition, jet fuel prices remain a key risk to profitability for the year and it could remain elevated for the rest of the year. While SIA's cargo traffic looks likely to stay weak given Asia-Pacific's greater share of global traffic, we believe most of the weakness has already been priced in. Maintain HOLD with an unchanged fair value estimate of S$10.85. (Lim Siyi) Telecoms Sector: SingTel gets BPL on non-exclusive basis Summary: SingTel has secured the broadcast rights for the 2013-2015 Barclays Premier League (BPL), further adding to its suite of soccer content. Interestingly, it was on a non-exclusive basis, meaning that SingTel is not required to make the content available to other Pay TV operators under the Cross Carriage ruling. And it also means that StarHub can separately negotiate for the same broadcast rights. While StarHub could win back some Pay TV customers should it secure the rights, we do not believe that it is crucial for the telco to do so. After all, it has done fairly well without BPL content for the past three years. It is also important to note that StarHub could be looking at a smaller pie than before. Until we see further developments in this space, we believe status quo should continue. We have an OVERWEIGHT view on the sector due to its defensive nature and relatively attractive dividend yields. (Carey Wong) ST Engineering: ST Aerospace secured S$590m of new contracts in 3Q12 Summary: Singapore Technologies Engineering (STE) has announced that its aerospace arm ST Aerospace has secured new contracts worth about S$590m in 3Q12. This total contract value is in addition to the component repair management Maintenance-By-the-Hour contract worth about US$80m (~S$102m) awarded by AirAsia in Jul this year. During 3Q12, ST Aerospace redelivered its first VIP Boeing Business Jet, a contract secured for B level check and interior modifications. Additionally, it completed airframe maintenance and modification work for 156 aircraft. We are confident that STE's order book continues to expand healthily. We maintain our fair value of S$3.81 and BUY rating. (Sarah Ong) STX OSV: Contracts for two offshore subsea construction vessels Summary: STX OSV has secured contracts for two offshore subsea construction vessels for Siem Offshore. Delivery is scheduled from Norway in 2Q14. We estimate the contract value to be around NOK1.3b (~USD230m). As contract win already forms part of our forward assumption (estimated NOK12-14b new orders over the next 12 months), we will be keeping our projections unchanged. Maintain BUY with unchanged fair value estimate of S$2.00. (Chia Jiunyang)

Lian Beng: 1QFY13 down from lumpy property recognition Summary: Lian Beng announced 1QFY13 (ended 31 Aug 2013) PATMI of S$10.5m - down 44.9% YoY - mostly due to the absence of a one-time S$7.9m disposal gain from an investment property sale in 1QFY12 and no profit contributions from the fully sold 55%-owned industrial development, M-space, which can only be recognized at TOP in FY14, as stipulated by the accounting standard INT FRS 115. 1QFY13 top-line also came in 16.5% lower YoY at S$113.4m similarly due to lower contributions from the property development segment. Looking ahead, the group expects to launch Spottiswoode Suites and Hougang Plaza, both 50%-owned, later in the financial year. We would speak with management regarding 1Q results later today and, in the meantime, put our Buy rating of Lian Beng and fair value estimate of S$0.47 UNDER REVIEW. (Research team) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks fell on Wednesday as Alcoa Inc. cut its global aluminium demand forecast and Chevron Corp. warned of lower earnings. The Dow declined 1% to close at 13,344.97. The S&P 500 Index fell 0.6% to close at 1,432.56. - Fraser and Neave's independent financial advisers say that the S$8.88-a-share offer by the Thai consortium is fair but not compelling. - OUE has confirmed that it was the party that made the made an offer to acquire the hospitality business of F&N for an aggregate consideration of ~S$1.4b.

MARKET PULSE: Oil and Gas, CapitaCommercial Trust, Sembcorp Marine, ST Engineering (5 Oct 2012)

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 6.09

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 13.34

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.53

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.00

MARKET PULSE: Oil and Gas, CapitaCommercial Trust, Sembcorp Marine, ST Engineering

05 Oct 2012

KEY IDEA Oil and Gas sector: Limited impact from shale gas on offshore oil capex With the shale gas boom in the US resulting in low Henry Hub prices, some investors are wondering if this would affect global oil demand, given the huge price differential between both energy sources. If so, this may impact oil prices and hence capital expenditure in the offshore oil industry, affecting companies in the sector. In this report, we contend that the US shale gas "revolution" has not, and is unlikely to bring down oil prices in a significant way any time soon. Assuming the global economy does not fall into a deep recession, the worry should still be on oil prices being on the high side. We maintain our Overweightrating on the oil and gas sector, and we expect continued good performance from Sembcorp Marine [BUY, FV: S$6.09], Keppel Corp [BUY, FV: S$13.34], Ezion [BUY, FV: S$1.53] and STX OSV [BUY, FV: S$2.00]. (Low Pei Han, Chia Jiunyang) MORE REPORTS CapitaCommercial Trust: Refinanced convertible bonds due 2013 CCT recently announced that it had refinanced the outstanding balance of its convertible bonds due 2013 with a new S$175m CB issue due 2017. The new 2017 CB has a yield to maturity of 2.5% (versus 3.95% for the 2013 CB), and would yield net proceeds of S$171.9m, of which S$141.1m would be paid for the 2013 bonds (total of S$126m face value) priced at 111.30 and S$20.75m for the settlement of a clean-up call at 109.37 expected on 15 Oct 2012. We like that CCT continues to comfortably manage its debt expiry schedule and maintains steady access to capital markets at relatively attractive rates. Maintain BUY with a higher fair value estimate of S$1.62 (versus S$1.53 previously), as we incorporate firmer cap rates assumptions to reflect more benign expectations for the office sector. (Eli Lee) Sembcorp Marine: Secures LOI for Norwegian sector newbuild rig Sembcorp Marine (SMM) announced this morning that it has signed a letter of intent (LOI) with repeat customer Prosafe AS for the construction of a semi-submersible accommodation rig with two options for further new builds (subject to board approval). The rig is of similar design as Safe Boreas, which Prosafe ordered from SMM in Dec last year at a price tag of US$291.6m. Two options were also granted to Prosafe then. Should this LOI turn effective (i.e. option exercised), Prosafe would, in total, have options for three new builds at Jurong Shipyard. Assuming the price of this latest rig is the same, it would also boost SMM's new order wins YTD to about S$9.47b, close to our full-year estimate. Maintain BUY with S$6.09 fair value estimate.(Low Pei Han) ST Engineering: ST Electronics won S$166m of contracts in 3Q12 ST Engineering's electronics arm ST Electronics has won about S$166m worth of contracts for its Rail Electronics and Satellite Communications & Sensor solutions in 3Q2012. A consortium led by ST Electronics was awarded a RMB198m (about S$39m) contract in the city of Wuxi, China. ST Electronics will supply, deliver, install, test and commission as well as provide warranty for an Integrated Supervisory Control System for Wuxi Metro Lines 1 and 2. ST Electronics was also awarded a contract to supply and maintain half height platform screen doors for the BTS SkyTrain in Bangkok, Thailand. These contracts attest the capabilities of ST Electronics. We maintain BUY on ST Engineering with a S$3.81 fair value.(Sarah Ong)

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

NEWS HEADLINES - US stocks rose on better-than-expected data on weekly applications for jobless benefits and factory orders in Aug. The Dow climbed 0.6% to end at 13,575.36. The S&P 500 Index rose 0.7% to 1,461.40. - Global Logistics Properties has signed a new lease agreement of ~39k sqm to Arata Corporation, a Japanese wholesale company, for a consumer goods distribution centre in Greater Osaka, Japan. - Europtronic Group has issued a profit warning for 3Q12. The company attributes the loss to the provision or write-off of cost of investments in two subsidiaries which will be undergoing a voluntary liquidation and weak demand in the electronic components market. - UPP Holdings has announced that there has been an extension of the long-stop date to 31 Dec 2012 for the proposed JV in Myanmar. - Eastern Holdings has invested S$10m in the Fullerton SGD Income Fund, using dormant funds in its corporate accounts.

MARKET PULSE: Residential Property, First REIT, STX OSV (3 Oct 2012)

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 13.18

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.98

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.00

MARKET PULSE: Residential Property, First REIT, STX OSV

3 Oct 2012

KEY IDEA SG Residential Property: Prices still creeping up 3Q12 flash estimates for the URA Residential Price Index showed a sustained increase of 0.5% QoQ (versus 0.4% in 2Q12), cumulating to a total rise of 0.9% year to date. Again, the most bullish action was in the mass-market segment (Outside Central Region) where prices increased 1.0% in 3Q12 (versus 0.5% in 2Q12). In addition, we also saw a 0.2% and 0.7% price increase in the high-end (Core Central Region) and mid-tier (Rest of Central Region) segments, respectively. We believe an environment of ample liquidity would continue to drive residential demand and prices, particularly after QE3 and consequently increased visibility of low interest rates further out to 2015. Maintain OVERWEIGHT on residential developers. Our top pick is City Developments [FV: S$13.18, BUY]. (Eli Lee) MORE REPORTS First REIT: Entrenching its Indonesian footprint First REIT (FREIT) recently announced its proposal to acquire two Indonesian properties (one integrated hospital and hotel and the other a hospital) from its sponsor Lippo Karawaci for a total purchase consideration of S$142.9m. This would be funded largely by debt and partly by a private placement exercise. While the lease structure was largely similar to its existing Indonesian asset portfolio and would continue to provide unitholders with stability and income visibility, there were some lease terms which we were disappointed with. We had previously assumed new acquisitions in our model and hence finetune our assumptions in accordance to the updated details. We also roll forward our valuations to FY13, although this is partially mitigated by an enlarged unit base from its impending private placement exercise. Our RNAV-derived fair value estimate increases from S$0.96 to S$0.98. Maintain HOLD given FREIT's rich valuations. (Wong Teck Ching Andy) STX OSV: Secures contract for cable laying vessel STX OSV has secured a contract for the design and construction of one Cable Laying Vessel worth about NOK 450m (approx USD 80m). The vessel will be of STX OSV's own CLV 01 design. Delivery is scheduled from Norway in 3Q14. As contract win already forms part of our forward assumption (estimated NOK12-14b new orders over the next 12 months), we will be keeping our projections unchanged. Maintain BUY with unchanged fair value estimate of S$2.00. (Chia Jiunyang)

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

NEWS HEADLINES - The Dow dropped slightly following the Spanish PM's denial that a bailout request was imminent. The Dow closed down 0.2% to 13,482.36. The S&P 500 Index climbed 0.1% to 1,445.75. - Loyz Energy has signed an agreement to sell its sanitary ware division for S$9.0m so as to concentrate on its exploration and production business. The sale is subject to shareholders' approval. - Olam International, the largest shareholder in NZ Farming Systems Uruguay, is offering to acquire the remaining 14.07% it does not own in the diary farm company for NZ$25.8m (S$26.4m). - Jason Parquet Holdings has been awarded three contracts worth a total of S$5.1m. - Frasers Property Australia has started work on Australia's first cantilevered high-rise garden located in Central Park, its residential project along the southern edge of Sydney's CBD.

STX OSV - Gold, for the price of silver

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: MacQuarie

Price Call: BUY

Target Price: 2.16

STX OSV - Gold, for the price of silver

Macquarie Equities Research (MER) has most recently initiated coverage on STX OSV, a Norwegian builder of Offshore Support Vessels (OSV). MER rates the stock Outperform with a 12-month target price of $2.16, offering a 41% upside potential (based on the 30 Aug closing price of $1.53). Code Name Type Expiry Exercise Price Q5PW STXOSV MB eCW130201 Call 01-Feb-13 1.65 Below are some excerpts of the MER report published on 31 August 2012. Market leader in the high growth high-spec OSV segment The OSV market is increasingly bifurcated towards high-spec OSV, a segment in which STX OSV is the global market leader. Buyers of high-spec OSVs are mostly Norwegian, and these OSVs are mainly deployed in Northwest Europe and Brazil. With 10 yards in four countries which are the hotbed of OSV activity and long-lasting relationships with all top Norwegian contractors, STX OSV is in a sweet spot. Robust industry dynamics; OSV demand to intensify While global OSV demand has rebounded from global financial crisis lows (252 OSVs ordered in 2011 and 145 in 1H12 vs 110 in 2009), Ultra deepwater oil exploration has led to an increase in complexity and vessel intensity, which is why MER thinks that the OSV building cycle has legs despite short-term concerns on oversupply. Only 44% of the current 2,973 OSV fleet is high-spec, while the delivery schedule of high- spec Anchor Handling Tug Supply Vessels (AHTS) in particular is very weak (only 79 to be delivered from 2013-15). 150 new and more complex oil rigs are to be supplied to the market over the next three years, which, MER thinks, will require more OSVs and hence the current ratio of 2,973 OSV / 769 oil rigs will expand further. Beneficiary of market bifurcation and increasing intensity Driven by more demand for high-spec OSVs, MER expects STX OSV's order inflows to improve to NOK12.5bn in 2012 vs NOK11bn in 2011 and further improve to NOK14bn in 2013. Excluding the exceptional returns in 2011 (due to high margin orders from 2008), sustainable margins have improved from 5% in 2009 to 12-14% now. MER expects a steady 5% earnings Compound Annual Growth Rate (CAGR) from 2010-14E. High-return cash rich business model STX OSV has an exceptionally strong balance sheet (-0.4x net debt / equity) and a robust Free Cash Flow (FCF) generation (13% FCF yield) and high return (ROE ~25% and ROIC ~35%) business model, much superior to listed OSV peers in Singapore and even better than the large-cap rig builders. Shareholders have also benefitted via high dividend yields of 9-10% each in 2011 and 2012, which could be moderated to a 4-5% yield to preserve cash for funding future growth, in MER's view. Valuations ignoring premium positioning plus high returns MER thinks that STX OSV deserves to trade more in line with the rig builders, given that the listed OSV players in Singapore target the low-end, low-return segment of the market and have much inferior balance sheet and return profiles. STX OSV is currently trading at an approximate 50% discount to Singapore yards and approximately 15% discount on price-earnings ratio compared with listed OSV peers despite much superior market share, balance sheet and return profile. _____________________________________________________________________________

Macq starts STX OSV at Outperform, 'In sweet spot'

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: MacQuarie

Price Call: BUY

Target Price: 2.16

Macquarie starts STX OSV at Outperform with $2.16 target. The house expects the OSV market to remain skewed toward the high-spec segment, with STX OSV the global market leader.

“With 10 yards in four countries which are the hotbed of OSV activity and long-lasting relationships with all top Norwegian contractors, STX OSV is in a sweet spot.”

It says ultra-deepwater oil exploration has led to an increase in complexity and vessel intensity, and Macquarie expects the OSV building cycle has legs despite short-term oversupply concerns. It estimates 2012-13 order flows will improve to NOK12.5 billion ($2.7 billion) and NOK14 billion respectively from 2011's NOK11 billion,noting sustainable margins have improved to 12%-14% from 2009's 5%.

“STX OSV has the strongest balance sheet amongst its peers, highest FCF generation and highest ROEs. This allows the company to distribute handsome dividends to its shareholders. However, we think investors are ignoring the above and unjustifiably comparing STX OSV with the low-end OSV players listed on the Singapore exchange.”

It tips a strong case for a valuation re-rating. The stock is +4.3% at $1.58.

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.

MARKET PULSE: CACHE, CDLHT, CMA, STX-OSV, Dyna-Mac (02 Jul 2012)

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 2.04

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.76

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.00

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 0.34

MARKET PULSE: CACHE, CDLHT, CMA, STX-OSV, Dyna-Mac

02 Jul 2012

KEY IDEA Cache Logistics Trust: Beefing up market position Summary: Cache Logistics Trust (CACHE) had received approval from unitholders pertaining to the proposed acquisition of Pandan Logistics Hub and the entry of a master lease agreement with CWT Limited. With the addition of this prime logistics property, CACHE will have 12 quality assets under management and an enlarged GFA of ~4.83m sq ft. CACHE also embarked on a capital management exercise to enhance its debt profile, consistent with our expectations. Notably, the effective interest rate for the new bank facility is 2.8% plus SOR, which is at 30bps below its existing rate of 3.1% plus SOR. Hence, CACHE is likely to gain from interest savings going forward. We are reiterating our BUYrating on CACHE. Our fair value is raised from S$1.11 to S$1.18, after we incorporate the acquisition of Pandan Logistics Hub and interest savings into our model. (Kevin Tan) MORE REPORTS CDL Hospitality Trusts: Garden of Supertrees Summary: Gardens by the Bay, officially opened last Thursday and the new Marina Bay Cruise Centre will solidify Marina Bay as a key tourist cluster to complement Sentosa. STB has a target of 17m visitor arrivals by 2015, implying a growth rate of 6.6% p.a. from 2011. Even with a "leakage" from the conversion of visitor arrivals into hotel rooms nights because cruise passengers are much less likely to book hotel rooms, we estimate that hotel room demand will grow by an enviable 6.4% p.a., easily outstripping the growth in hotel rooms, which we estimate at 3.7% p.a. The 6.4% estimate conservatively assumes no change in hotel room nights per hotel guest. We maintain a BUY rating on CDLHT and our fair value of S$2.04. (Sarah Ong) CapitaMalls Asia: Established USD1b China Development Fund III Summary: CapitaMalls Asia (CMA) announced today that it has established a USD1.0b CapitaMalls China Development Fund III (CMCDF III). CMCDF III would have a fund life of eight years, and would primarily invest in retail properties in China. CMA would hold a 50% stake amounting to USD500m; remaining stakes are held by institutional investors from Asia and North America. The fund would own three CMA shopping malls, currently under development, as seed assets. These are CapitaMall Tianfu (Chengdu), CapitaMall Meilicheng (Chengdu), and the Luwan integrated development (Shanghai). We would speak with management further on this development today, and in the meantime, maintain our BUY rating with an unchanged fair value estimate to S$1.76. (Eli Lee) STX OSV: Secured NOK 500m contract with Island Offshore Summary: STX OSV announced that it has secured new contracts with Island Offshore for the construction of two Platform Support Vessels (PSVs). The total contract value is approximately NOK500m (USD80m). Deliveries are scheduled from STX OSV Brevik in Norway in 4Q13 and 2Q14. Year-to-date, STX OSV has secured about NOK7.2b worth of contracts, forming about 65% of our full-year estimates (NOK11b). Maintain BUY with an unchanged S$2.00 fair value estimate. (Chia Jiunyang) Dyna-Mac Holdings: Acquisition of Chinese fabrication yard Summary: Dyna-Mac Holdings Ltd (DMH) announced that it has entered into an agreement to purchase 70% of the paid up capital of Paliy Marine Engineering Pte Ltd (PME) for S$3.8m. PME operates a fabrication yard of about 100,000 sqm in Guangzhou City and has been engaged in the fabrication of structural blocks for semi-submersibles over the past three years. In FY11, PME recorded a net profit of RMB5.4m (or S$1.1m) compared to DMH's S$5.6m (for seven months ended 31 Dec 2011*). We will speak with management to understand more about the acquisition. In the meantime, we put our Hold rating and S$0.34 fair value estimate UNDER REVIEW. (Chia Jiunyang)

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

NEWS HEADLINES - US stocks jumped on Friday after Europe agreed on actions to boost the economies of its more troubled nations. The S&P 500 Index and the Dow climbed 2.5% and 2.2% respectively. - Popular Holdings' revenue for FY12 rose 8.6% to S$567.3m and PATMI jumped 92.5% to S$29.6m. - Creative Technology expects its revenue for 4Q12 to come in below target, at ~US$35m, primarily due to lower than expected demand in Europe. As previously announced, the company expects to report an operating loss for the quarter. - Catalist-listed EMS Energy is acquiring a 23.98% stake in Nosco-Vinalines Ships Repair Company, which is constructing the biggest ship repair yard in Vietnam. EMS will fund the stake through a rights issue and proposes to raise up to S$16.4m.