Charts tip buy Sakari with $1.70 target: UOB KayHian

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.70

Charts tip Sakari Resources at Buy with $1.70 target, UOB KayHian technical analysis says.

“The stock appears to be staging a strong rebound at its mid Bollinger band or near $1.40, a level to hold for further upside. Its 20-day moving average looks poised to cross above its 50-day moving average and a break above $1.57 is likely to result in this target being achieved.”

It advises watching for possible bullish crossovers on its MACD and Stochastics indicators.

It tips stops could be placed below $1.39. The stock is up 3.0% at $1.525 in solid volume.

MARKET PULSE: Sakari, CapitaLand and Breadtalk (01 Aug 2012)

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.45

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 3.25

Stock Name: BreadTalk
Company Name: BREADTALK GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.56

MARKET PULSE: Sakari, CapitaLand and Breadtalk

01 Aug 2012

KEY IDEA Sakari Resources: Longer-term outlook still muted Summary: Sakari Resources Limited (SRL) posted a decent improvement in 2Q12. 1H12 revenue met 49% of our FY12 forecast, while net profit met 64% of our full-year estimate. Higher sales volume, steady ASPs and improved cash costs were the key reasons behind the better-than-expected showing. We are upgrading our FY12 earnings estimate by 42% as SRL is likely to achieve the lower end of its US$85-90/ton ASP guidance for this year. However, with current global coal prices already below its ASP guidance, a prolonged slump could affect FY13 performance. With the current undemanding valuation, we maintain our HOLD rating and S$1.45 fair value. (Carey Wong) MORE REPORTS CapitaLand: Little surprises in 2Q12 numbers Summary: CAPL announced 2Q12 PATMI of S$385.9m - down 5.1% YoY. Adjusting for revaluations and impairments, we estimate 2Q12 PATMI at S$179.5m, which is broadly in line with our expectations. Top-line for the quarter came in at S$862.5m, climbing 16.5% YoY mostly due to a stronger contribution from residential sales in Singapore, China and Australia and revenues from Japanese shopping malls. In China, we saw the number of residential units sold jump 218% QoQ to 812 units, from an anemic 189 units in 1Q12, as buyer sentiments rebounded somewhat over the quarter. The Phase 3 of Beaufort in Beijing on 20 May 12 turned in positive numbers with over 61% of units launched already sold. In Singapore, 202 units were sold in 2Q12 (57 in 1Q12) with most of the increase in QoQ sales due to the Sky Habitat launch in Apr 12. We would speak with management about the results later today and in the meantime, put both our Buy rating and fair value estimate of S$3.25 UNDER REVIEW. (Eli Lee) BreadTalk Group: Stable 2Q12 expected Summary: Despite the difficult operating environment during the second quarter of the year, we remain hopeful for a stable QoQ showing in BreadTalk Group's (BTG) 2Q12 results, which are due to be released on 10 August. While F&B retail sales in Singapore have declined on a MoM basis, we do not anticipate a significant revenue drop-off due to BTG's strong bakery brand equity and popular Din Tai Fung (DTF) restaurant chain. Furthermore, BTG's operations in China and Thailand will provide additional support through strong sales in its bakery and Bangkok DTF respectively. Going forward, the environment remains challenging as costs of raw materials such as wheat and corn have touched 17 month highs on supply concerns. While we retain our confidence in management's ability to control costs, we adjusted our FY12 costs of sales projections slightly to incorporate the likelihood of a sustained elevation in raw material costs for the year. This adjustment sheds a cent off our fair value estimate to S$0.56. Reaffirm our HOLD rating ahead of BTG's 2Q12 earnings announcement. (Lim Siyi)

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

NEWS HEADLINES - US stocks fell on concerns that central banks would not stimulate the global economy sufficiently. The Dow fell 0.5%, but still ended up 1% in Jul. The S&P 500 Index lost 0.5%, giving it a 1.3% rise from end-Jun. - BH Global Marine saw 2Q12 revenue decline 32% YoY to S$27.9m. PATMI fell 49% to S$2.0m. - Hotel Properties Ltd has formed a JV with two other companies to purchase a freehold, income-producing property located at 29-30 Old Burlington Street, London, for a consideration of £85m. - Parkson Retail Asia has completed its proposed acquisition 41.82% of the issued and paid up share capital of Sri Lankan company Odel for a total consideration of ~S$13.6m. - Yamada Green Resources expects to record a 4QFY12 loss, mainly due to fair-value losses from biological assets and lower gross profit from sale of self-cultivated fungi; but expects to remain profitable for FY12.

MARKET PULSE: CMA, Tiger, SingPost, Sakari (31 Jul 2012)

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.85

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.83

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.14

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.45

MARKET PULSE: CMA, Tiger, SingPost, Sakari

31 Jul 2012

KEY IDEA CapitaMalls Asia: Appetite for acquisitions stay strong Summary: CMA would acquire Olinas Mall in Tokyo, close to JR Kinshicho Station, for S$367.3m (JPY 22.8b). The freehold-lease mall has an NLA of 381k sq ft and the acquisition price translates to a psf cost of S$964 per sq ft, with a NPI yield of 6%. In addition, management expects to acquire, from Vanke Real Estate Group, a shopping mall site in Qingdao, China. The mall is expected to have a GFA of 89.7k sqm, with a total development cost of S$294.9m (RMB1,457m). Both acquisitions appear to be fairly priced, in our view, and we see limited RNAV accretion at this juncture. We believe CMA's active acquisition stance, after recent divestments to a new private fund, points to an unabated appetite for portfolio expansion and capital recycling despite current macro uncertainties. Maintain BUY with an unchanged fair value estimate of S$1.85. (Eli Lee) MORE REPORTS Tiger Airways: Recovery gaining traction Summary: Tiger Airways' revenue in 1QFY13 edged 1% higher to S$181m while its net loss narrowed to S$14m, from S$21m a year ago. The increase in revenue was primarily driven by higher passenger yields, while lower average jet fuel prices (JETKSIFC Index) also provided some cost relief. In segmental terms, Tiger Singapore returned to profit for the first time since TGR's flying restrictions in Australia were imposed last year. On the other hand, Tiger Australia's operating losses narrowed to S$21m, from S$23m in 1QFY12, despite having a much smaller operations than a year ago. Furthermore, Tiger Australia is looking good with the ramping up of its operations to 60 sectors/day and the expected peak travel season later this year. Factoring in the improved operations of TGR, we increase its P/B multiple to 3x and our fair value estimate to S$0.83/share, from S$0.76/share previously, and maintain our BUY rating on TGR. (Eric Teo) Singapore Post: Good 1QFY13 showing Summary: Singapore Post (SingPost) reported a 6.5% YoY rise in revenue to S$151.6m but saw a 2.9% fall in net profit to S$38.1m in 1QFY13. Results were in line with our expectations, with net profit accounting for 26.5% of our full year estimates vs 28.1% of the street's estimate. SingPost remained in a net cash position of S$161.4m pending the use of funds raised earlier for investment opportunities. Amidst the uncertain environment for investors, we believe that the defensiveness of SingPost's businesses and its consistently decent dividends translates to a favourable risk-reward ratio for equity investors. In line with its usual practice, SingPost has declared an interim dividend of 1.25 S cents per share, which will be paid on 31 Aug 2012. Maintain BUYwith S$1.14 fair value estimate. (Low Pei Han) Sakari Resources: Shows 2Q12 improvement Summary: Sakari Resources Limited (SRL) reported a decent set of 2Q12 results, with revenue rebounding 5.4% YoY and 26.1% QoQ to US$238.0m. Revenue was boosted by higher sales volumes and steady ASPs of its thermal coal. While net profit tumbled 38.5% YoY to US$23.9m, it jumped 65.6% QoQ. The higher net profit was aided by lower costs, as a result of improved production efficiency, and gross margin also improved to 23.1% from 20.2% in 1Q12. Earnings were boosted by a fair value gain of US$8.3m, which was somewhat offset by an additional US$4.2m assessment for prior years' taxes. For 1H12, revenue fell 8% to US$426.8m, meeting 48.7% of our FY12 forecast, while net profit declined 57% to US$38.4m, or 63.5% of our full-year estimate. SRL declared an interim dividend of US$0.02/share (retaining its 60% payout ratio), though down from US$0.0424 a year ago. SRL will be hosting an analyst teleconference later in the evening. Until then, we place our HOLD rating and S$1.45 DCF-based fair value under review. (Carey Wong)

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

NEWS HEADLINES - Two critical central bank meetings (US Fed and ECB) and an unusually heavy load of economic data will be released this week. - Trading in shares of Luye Pharma have been suspended due to low public float. - Tuan Sing Holdings posted 2Q12 net profit of S$11.6m, up more than two-fold from 2Q11. - Cambridge Industrial Trust reported a 13.9% YoY rise in DPU to 1.18 S cents in 2Q12. - Riverstone Holdings delivered a 7.2% YoY increase in net profit to RM11m in 2Q12. Turnover rose due to higher demand for healthcare gloves and recovery in demand for cleanroom gloves. - Trek 2000 International expects to report a loss for 2Q12, mainly due to a one-time write-off of ASIC chips because of a design flaw.

OCBC cuts Sakari to 'hold'

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.45

OCBC Investment Research downgraded its rating on Singapore-listed Indonesian coal mining firm Sakari Resources to ‘hold’ from ‘buy’, citing lower coal prices.

Shares of Sakari fell 1.38% to S$1.42 and have fallen 22.3% so far this year.

Sakari’s share price has plunged about 32% since it reported first quarter results on April 30, underperforming the Straits Times Index’s 8.6% fall in the same period.

Sakari’s share price drop was partly due to its poor earnings in January-March and a continued fall in coal prices, said OCBC, and lowered its target price on the stock to $1.45 from $2.29.

The broker cut its coal price assumption by 10% to US$76 ($98) per tonne, resulting in a 48% fall in its 2012 earnings forecast for Sakari.

“If coal prices continue to remain depressed or drift lower, this would further jeopardise the company’s targeted average selling price of around US$85-$90 per tonne for this year,” OCBC said.

Sakari Resources - On the cusp of a transformation

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 2.73

Target S$2.73

4Q11 revealed the power of Sebuku's operating leverage. This was just the start of is structural transformation. Margins will be elevated as the group ramps up  production at the Northern Leases. Ongoing reviews at Jembayan will further boost long-term profitability. Recent changes to Indonesia's mining rules do not affect SAR. We adjust our FY12-14 EPS (-19% to +7%) on revised volume assumptions and lift our target price on higher forex assumptions, still based on 9.6x FY13 P/E (FY08-09 downturn mean). Maintain Outperform.

Source: CIMB Daybreak - 21 March 2012, Full PDF Report

Sakari Resources rated 'buy' by DBS

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 2.70

DBS Vickers Securities in a Mar 9 research report says: "The Indonesian government has issued regulation to limit foreign ownership in the mining sector (coal, mineral, metals).

"A senior government official says that the new regulation will apply only to new contracts and will not directly apply to existing contracts prior to the issuance of the regulation. In addition, our checks with SAR management indicate that they have discussed with their legal advisors and they believe there will be absolutely no impact on their mines.

"Meanwhile, operations continue to be on track and Sakari will reap benefits from the Sebuku Northern Leases supercharger in FY2012. Coal prices could get a boost as well if oil prices continue to rise. Target price of $2.70. MAINTAIN BUY."

Sakari Resources upgraded to 'buy' by DBS

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 2.70

DBS Vickers Securities in a Feb 15 research report says: "4Q11 net profit of US$73 million (up 139% y-o-y and 97% q-o-q) was significantly better than expected owing to (i) higher than expected production at the Sebuku Northern Leases, (ii) higher blended ASP of close to US$100/ton, (iii) lower than expected cash cost of US$34/ ton in Sebuku, compared to US$44/ton in 3Q11, (iv) hedging gains of US$13.9 million under the new risk management policy and (v) lower tax rate of 27% (30% in FY10).

"FY2011 net profit of US$190 million (up 116% y-o-y) was SAR's best FY result to-date. Final dividend of 5.8 US cents declared. Target price is raised to $2.70, pegged to midcycle forward valuation (of blended 12x PE/ 3.5x P/BV). UPGRADE TO BUY."

MARKET PULSE: Sakari, Economy, Residential Property, OKP, SIA & SIAEC (16 Feb 2012)

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.76

Stock Name: OKP
Company Name: OKP HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.75

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 10.85

MARKET PULSE: Sakari, Economy, Residential Property, OKP, SIA & SIAEC

16 Feb 2012

KEY IDEA Sakari Resources: Upgrade to BUY, S$2.76 FV Sakari Resources Limited (SRL) posted a strong set of 4Q11 results, with revenue jumping 42.4% YoY and 40.4% QoQ to US$312.6m, aided by higher ASPs of coals sold in the quarter. Net profit was up 139.0% YoY and 97.3% QoQ at US$73.0m. For the full-year, revenue climbed 30% to US$1,013.6m, or 7.4% above our forecast, while net profit surged 116% to S$190.3m, or 17.9% above our estimate. Continued production growth at Sebuku will be central to management's plan in 2012; and SRL remains upbeat about thermal coal demand. Following the strong 4Q11 results and latest output guidance for 2012, we have fine-tuned our estimates. This in turn bumps up our DCF-based fair value to S$2.76 (S$2.06 previously). Coupled with an expected dividend yield of 5%, we upgrade our call to BUY. (Carey Wong) MORE REPORTS Singapore Economy: 2012 growth forecast kept at 1.0- 3.0% The Ministry of Trade and Industry (MTI) is maintaining its 2012 growth forecast at 1.0-3.0% after the Singapore economy grew by 4.9% in 2011; this as the global economic outlook remains subdued and Singapore's external-oriented sectors are likely to face a challenging environment ahead. This also does not factor downside risks such as a disorderly sovereign default in the Eurozone. Singapore's economy grew by 3.6% YoY in 4Q11, similar to the earlier advanced estimate. On a seasonally adjusted basis, the economy contracted by 2.5% QoQ, just slightly below the street's consensus of a 2.3% negative growth; this following a 2.0% expansion in 3Q11. Though manufacturing grew 9.2% YoY, it contracted by 11.1% QoQ due to a decline across most clusters, especially in electronics (weaker demand for semiconductor chips) and chemicals (plant shutdowns). Construction output fell 2.2% QoQ with a decline in private residential and commercial building activities. As for services, the sector grew 2.1% YoY and 1.7% QoQ. (Low Pei Han) Singapore Residential Monthly: Policy risk dominates URA data yesterday showed that 2,077 private residential units were sold in Jan 12. This was up 210% MoM, 35% YoY and a 14-month high. Excluding EC and landed units, 1,868 units were sold - up 205% MoM and 62% YoY - the most units sold in a whooping 21-month period. The vast majority of sales (94%) occurred in the mass-market segment. In stark contrast, the high-end/mid-tier was subdued, with sluggish take-up rates and negative MoM/YoY sales. In our view, the key driver of Jan 12 sales is undoubtedly still healthy mass-market demand, underpinned by strong HDB resale prices and monetary liquidity. However, given the strong show of political will to cool prices in Dec 11, we are wary of more curbs if headline sales escalate from here. We also remain cautious of the likely lagged impact on mass segment demand should global macro issues weigh on domestic economic growth ahead. Maintain NEUTRAL on residential developers. Our top property picks are CMA (FV: S$1.79, BUY) and CAPL (FV: S$2.11, BUY). (Eli Lee) OKP: Record earnings and healthy near-term prospects OKP reported a solid set of 4Q numbers and produced record earnings (S$26.6m) in FY11. 4Q's revenue (S$23.2m) declined 21.6% due to completion of some big projects. But as it wrapped up on CTE, the higher margins of the design and build contract were evident on its earnings. On a full year basis, FY11's gross and net margins improved to reach 39% and 24% respectively. Given its improved track record as a design and build player, and the government committed to several infrastructure projects, we believe OKP's near-term prospects are healthy. The group has also built up a strong balance sheet capable of seizing suitable growth opportunities. Possible growth avenues include diversifying into property development and seeking out acquisitions to add to existing construction capabilities. Applying 7.5x P/E peg on FY12 earnings, we derive a fair value estimate of S$0.75, maintain BUY. (Benjamin Lim) Singapore Airlines: Operating statistics fall across the board Singapore Airlines (SIA) reported its Jan 2012 operating statistics. The parent airline's passenger capacity (ASK) grew 3.8% YoY while its passenger traffic (RPK) gained a smaller 2.4% YoY, resulting in passenger load factor (PLF) falling to 77.0%, compared to 78.1% in Jan 2011. SilkAir's RPK again gained a strong 13.2% YoY but it recorded an even faster ASK growth of 13.7% YoY. Thus, SilkAir's PLF also fell to 76.2%, lower than the 76.5% in Jan 2011. SIA Cargo's freight capacity (AFTK) fell 8.5% YoY but its freight traffic (FTK) contracted by 12.8% YoY. SIA Cargo's freight load factor (FLF) fell to 58.5%, which is also the first time that it dropped below 60% since Apr 2009, from 61.4% in Jan 2011. We maintain our fair value estimate of S$10.85/share and HOLDrating on SIA. (Eric Teo) SIA Engineering: Scoot contract and new US facility SIA Engineering Co Ltd (SIAEC) announced the signing of an aircraft MRO services agreement with new low-cost carrier Scoot. The agreement will last two years with an option of a one-year extension. Also, SIAEC announced the opening of its line maintenance facility in San Francisco on 1 Feb 2012. This extends SIAEC's global network of line maintenance stations to 27 airports. SIAEC added both announcements are not expected to have a material impact on its financial performance in FY12. With an estimated dividend yield of 4.5%, we currently have a fair value estimate of S$3.88 per share and BUY rating on SIAEC. (Eric Teo)

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

NEWS HEADLINES - Europe's creditor countries continue to discuss stricter surveillance of budget controls in Greece, as indicated by Luxembourg PM Jean-Claude Junker, who chaired a conference call of Europe finance chiefs late yesterday. Junker emphasised that decisions will be made on 20th Feb. - Indonesia has cut its growth forecast for 2012 from 6.7% to the range of 6.5-6.6%, amid concerns that global economic uncertainties will drag down exports. - Koh Brothers' FY11 net profit increased 80% to S$19.9m, despite revenue declining 6% to S$341.1m. - China Fibretech issued a profit warning last night for the 4Q11/FY11. It expects to report materially lower revenue and a loss before taxation due mainly to the decrease in demand for its fabric processing services.

MARKET PULSE: CapitaLand, STX OSV, Olam, Goodpack, Tat Hong, Karin, Marco Polo Marine, Rotary, Sakari, SIAEC & ST Engineering (15 Feb 2012)

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 3.11

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.25

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.70

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 2.63

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

Research House: OCBC

Price Call: BUY

Target Price: 1.09

Stock Name: Karin
Company Name: KARIN TECHNOLOGY HLDGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.27

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.43

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 2.06

Stock Name: Rotary
Company Name: ROTARY ENGINEERING LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.61

Stock Name: SIA Engg
Company Name: SIA ENGINEERING CO LTD

Research House: OCBC

Price Call: BUY

Target Price: 3.88

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

Research House: OCBC

Price Call: BUY

Target Price: 3.01

MARKET PULSE: CapitaLand, STX OSV, Olam, Goodpack, Tat Hong, Karin, Marco Polo Marine, Rotary, Sakari, SIAEC & ST Engineering

15 Feb 2012

KEY IDEA CapitaLand: Outlook mostly intact Summary: CAPL reported 4Q11 PATMI of S$476.6m, down 20% YoY. Adjusting for one-time items, we estimate 4Q11 PATMI at S$221.9m - in line with our expectations. About 1,500 residential units were sold in China over FY11 and we see anemic Chinese sales in FY12 as buyer restrictions are likely to stay. In Singapore, 844 units were sold in FY11. A key launch ahead is Sky Habitat at Bishan which we believe would perform well. Major Shanghai malls, Minhang and Hongkou, opened for operations in FY11 and we forecast CMA's core earnings to increase 84% from S$120m in FY11 to S$221m in FY12, partially offsetting slowing residential sales. We maintain our BUY rating and adjust our fair value to S$3.11 from S$2.76 previously, mostly due to higher valuations for listed entities. (Eli Lee) MORE REPORTS STX OSV: Stellar 4Q results STX OSV reported a stellar set of 4Q results, which were above our and the street's expectations. Revenue declined by 12.9% YoY to NOK3.1bn, while net profit jumped 116.6% to NOK638m during the quarter. The exceptional high profitability in 4Q was mainly due to successful project deliveries and the release of risk contingencies at the end of complex projects. On a full year basis, revenue increased slightly by 4.4% YoY to NOK12.4bn, while net profit increased by 54.6% YoY to NOK1.6bn, supported by stable operations and productivity improvements. The group has recommended a 10 S cents dividend. We maintain BUY and raised our fair value estimate to S$2.25 (from S$1.60 previously) on higher order intake assumptions. (Chia Jiunyang) Olam Int'l: 1HFY12 results mostly in line Olam International Limited posted 1HFY12 revenue of S$7,716.4m, up 18.8%, meeting 40.8% of our FY12 estimate; core net profit fell 13.2% to around S$ S$132.8m, which still met 42.8% of our full-year forecast; this is also in line with the group's historical seasonality where it typically achieves around 35-40% of its earnings in the first half. Going forward, management remains positive of its prospects in 2HFY12; and is also on track to achieve US$1b net profit by FY16. As its results were mostly in line with our forecast, we will leave our estimates intact for now. Our fair value also remains unchanged at S$2.63 (18x FY12F EPS). Maintain HOLD. (Carey Wong) Goodpack Limited: Outlook and growth stable Goodpack reported 1HFY12 results that were in line with our expectations: revenue grew 22.2% YoY to US$87.2m while PATMI climbed 8.1% YoY to US$22.5m. Both figures constituted 53.4% and 55.3% of our FY12 projections respectively. Going forward, we expect demand for Goodpack's IBCs in 2HFY12 to remain stable at close to current levels as its main revenue segments, the natural and synthetic rubber businesses, continue to be supported by the automotive industry. In addition, price increases of between 9-12% on new IBC three-year contracts will take effect in 2HFY12 and provide some downside protection for Goodpack should demand taper off in the face of deteriorating macro-economic conditions. Reiterate BUY at an unchanged fair value estimate of S$1.70. (Lim Siyi) Tat Hong Holdings: Recovery underway Tat Hong Holdings (Tat Hong) reported a set healthy set of 3Q12 results with revenue and net profit increasing by 43% and 178% YoY to S$196m and S$13m respectively, attributable mainly to higher levels of activity across all divisions. Over a nine months period, net profit was S$31m (a 40% YoY increase), and represented 71% of our FY12F estimates. As the 3Q12 results marked a fourth consecutive quarter of improvement and with net margins reverting back to 6-7% (4Q11: 2.5%; 1Q12: 3.5%; 2Q12: 6.9%; 3Q12: 6.6%), we are optimistic of a steady recovery. Maintain BUY with unchanged fair value estimate of S$1.09 (on 10x FY13F EPS). (Chia Jiunyang) Karin Technology: Sequential improvement likely Karin Technology (Karin) reported 1HFY12 revenue of HK$1,519.4m (+68.6%) which topped our forecasts; but estimated core earnings of HK$25.5m (-2.6%) missed our expectations. This was due largely to lower-than-expected gross margin and higher effective tax rate. Top-line and core PATMI met 61.2% and 44.4% of our full-year projections, respectively. Karin's strong revenue growth was driven by a 131.8% surge in its IT Infrastructure segment, which more than buffered declines in its Components Distribution and ICAD segments. A dividend of 7 HK cents (inclusive of a 3.5 HK cent special dividend) was declared, versus 5 HK cents in 1HFY11. Looking ahead, we opine that Karin's new IT retail store operations could be its next leg of growth. We pare our core PATMI forecasts and obtain a new fair value estimate of S$0.27 (S$0.28 previously) after rolling forward our valuation to 6x blended FY12/13F core EPS. Downgrade to HOLD. (Wong Teck Ching Andy) Marco Polo Marine: 1QFY12 results within expectations Marco Polo Marine (MPM) reported a 26.8% rise in revenue to S$24.6m and a 8.5% increase in net profit to S$4.4m in 1QFY12, within ours and the street's expectations. The group's shipyard operations now accounts for 76.4% of total revenue with correspondingly lower contributions from ship chartering as associate BBR has been assuming more of the chartering business. However, BBR's profits were impacted by one-off forex losses in 1QFY12. The group's businesses are growing steadily, and the stock currently has an upside potential of about 17% based on our fair value estimate of S$0.43, but this is within our 30% range for small cap stocks. Hence we maintain our HOLD rating. (Low Pei Han) Rotary Engineering: Secures US$34m contract for storage tanks in Saudi Arabia Rotary Engineering announced that it has secured a US$34m EPC contract to build 17 field storage tanks in Saudi Arabia. Work is scheduled to start in Jun and is expected to be completed around middle of 2013. In the same announcement, Rotary also said that it has chalked up more than S$100m worth of contracts over the last several months. We will speak to management to get more clarity. In the meantime, we put our Hold recommendation and S$0.61 fair value estimate UNDER REVIEW. (Chia Jiunyang) Sakari Resources: Strong 4Q11 showing Sakari Resources Limited (SRL) posted a strong set of 4Q11 results, with revenue jumping 42.4% YoY and 40.4% QoQ to US$312.6m, aided by higher ASPs of coals sold in the quarter. Net profit was up 139.0% YoY and 97.3% QoQ at US$73.0m, the highest in any quarter, as sales of higher-value coal from Sebuku's Northern Leases helped to lift ASP to US$100/ton. For the full-year, revenue climbed 30% to US$1,013.6m, or 7.4% above our forecast, while net profit surged 116% to S$190.3m, or 17.9% above our estimate. Meanwhile, SRL is continuing with its policy of paying 60% of its net profit as dividend - this by declaring a final dividend of 5.83 US cents, bringing the total to 10.07 US cents for FY11. We will be attending an analyst conference call later in the evening, and until then, we place our Hold rating and S$2.06 fair value under review. (Carey Wong) SIA Engineering: JVs progressing well SIA Engineering Co Ltd (SIAEC) last night announced new developments to its recent joint ventures with SAFRAN and Panasonic Avionics Corp. SIAEC signed an agreement with Messier-Bugatti-Dowty, a division of the SAFRAN Group, to appoint SIAEC as its authorised repair centre (ARC) to provide MRO services for Messier-Bugatti-Dowty wheels and brakes. Separately, SIAEC and Panasonic Avionics Corporation announced the official opening of Panasonic Avionics Services Singapore (PACSS), a joint venture owned by SIAEC (42.5%) and Panasonic Avionics Corporation (57.5%). Singapore-based PACSS will provide MRO of IFEC systems and components for aircraft transiting at Changi Airport. SIAEC said both announcements are not expected to have a material impact on its financial performance in FY12. With an estimated dividend yield of 4.5%, we currently have a fair value estimate of S$3.88 per share and BUY rating on SIAEC. (Eric Teo) ST Engineering: New 10-year MRO contract ST Engineering (STE) last night announced its aerospace arm has been awarded an engine maintenance, repair and overhaul (MRO) contract to support Korean LCC Eastar Jet. The contract value is estimated to be ~US$15m (S$18.8m) per year. And the engines will be maintained by ST Aerospace's engine facilities located in Singapore and Xiamen, China. Pending the FY11 results announcement, our Buy rating and fair value estimate of S$3.01/share on STE is currently UNDER REVIEW. (Eric Teo)

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

NEWS HEADLINES - European finance ministers have postponed a meeting (originally scheduled for today) on the Greek debt crisis to 20 Feb. The euro traded close to a one-week low. - Moody's mass downgrade of the creditworthiness of European countries yesterday had little market impact. The downgrade echoes those from Standard & Poor's and Fitch last month. - The Hour Glass Ltd reported an 18% YoY increase in revenue for 3QFY12 ended Dec 2011 to S$170m, and net profit increased 66% to S$18.4m. The group is cautiously optimistic about luxury retail sentiment. - Global Logistic Properties' 3QFY12 ended Dec 2011 saw revenue increase 19% YoY to US$145m and NPAT increased by 3% to US$86m.

Sakari Resources rated 'neutral' by CIMB

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 2.48

CIMB in a Nov 1 research report says:"Firm coal prices bode well for SAR, whose 3Q11 earnings were lifted by higher ASPs. 3Q11 ASP rose 32% y-o-y, boosting revenue by 21%. We believe volume and margin expansion will power its earnings in the next two years.

"3Q11 and 9M11 meet consensus and our expectations, at 23%/73% of FY11. We cut FY12-13 EPS by 7% to incorporate management's lower production targets. In view of economic uncertainties, Jembayan's expansion may be delayed.

"Nevertheless, value is emerging after the stock's 13% underperformance vs. Indonesian peers over the past month. At 9.8x CY12 P/E, SAR is trading in line with its peers. Target price of $2.48. NEUTRAL."

Sakari Resources falls on broker cut

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: CIMB

Price Call: SELL

Target Price: 2.46

Shares of Singapore-listed coal miner Sakari Resources (SAKR.SI) fell as much as 4.7% on Thursday to a one-month low after a brokerage downgraded the firm, saying weakening economic prospects would hurt demand for commodities.

At 10:51 a.m., shares of Sakari Resources were traded at $2.46 with over 2.4 million shares changing hands.

CIMB Research has cut its rating for Sakari to underperform from neutral but kept its target price at $2.47.

The brokerage noted that coal prices may have peaked, and while Sakari’s valuations are not high compared to its peers, macroeconomic headwinds may drag down its valuations.

“Straits Asia’s stock price has outperformed its Indonesian peers by 10% in the past month, prompting us to turn cautious,” said CIMB in a report.