Valuetronics started at "buy", 64-cent target by OSK DMG

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OSK-DMG

Price Call: BUY

Target Price: 0.64

SINGAPORE (March 2): OSK DMG has started coverage on Valuetronics with a "buy" rating and 64-cent price target.

The maker of consumer and industrial electronic products is "substantially undervalued", with its net cash representing 56% of its current market value and the stock trading at a "bargain" of 2.5 times projected 2016 earnings excluding cash, according to OSK DMG analysts Jarick Seet and Terence Wong.

Valuetronics kept at 'buy' with 57 cents target price by KGI Fraser

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: KGI Fraser

Price Call: BUY

Target Price: 0.57

SINGAPORE (Feb 11): KGI Fraser Securities has retained its "buy" rating on Valuetronics Holdings with a higher target price of 57 cents, saying the stock of the electronics original equipment manufacturer is an undervalued gem.

"(It's) hard to find another stock, with such fundamentals, this cheap. Valuetronics is currently trading at only 6.3 times estimated core price-earnings ratio of financial year ending Mar 31, 2015 (FY15) or 2.5 times ex-cash," said KGI Fraser analyst Renfred Tay in a note today.

SG: MARKET PULSE: United Envirotech, Valuetronics, CityDev (6 Aug 2013)

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.975

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.195

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 12.04

MARKET PULSE: United Envirotech, Valuetronics, CityDev

6 Aug 2013

KEY IDEA United Envirotech: Decent 1QFY14 start Summary: United Envirotech Ltd (UEL) reported 1QFY14 revenue of S$44.1m, +37.5% YoY (but -5.9% QoQ), meeting 14.2% of our FY14 forecast, while net profit slipped 2.6% YoY and 18.9% QoQ to S$5.7m, or about 12.5% of our full-year forecast. We deemed it to be a decent start as its fiscal first quarter tends to be seasonally softer. Going forward, management remains upbeat about its prospects in China, where the Chinese government has a planned investment on CNY4t in water resources by 2020; it adds that China is consistently tightening the effluent discharge standards. But we are tweaking our FY14 estimates slightly lower (revenue by 7.4%, earnings by 5.1%) to account for a likely smaller EPC pipeline. Our fair value also eases slightly from S$1.03 to S$0.975, still based on 13x FY14F EPS. Given the limited upside after the recent outperformance, we downgrade it to HOLD. (Carey Wong) MORE REPORTS Valuetronics Holdings: Discontinuing coverage Summary: Valuetronics Holdings Limited (VHL) will begin FY14 on a fresh page, as it will no longer incur losses on its Licensing business following its decision to terminate operations in 2QFY13. Any recovery in VHL's earnings will likely translate into higher dividends for its shareholders, in our view, as VHL had a relatively stable dividend payout ratio of 37-42% from FY10-13. This is also supported by VHL's strong net cash position. Looking ahead, we believe that VHL will focus its attention largely on its LED lighting OEM business, given the robust industry growth prospects and its largest customer's market leadership position in this field. However, given the continued lack of trading liquidity in VHL's stock and a reallocation of resources, we are CEASING COVERAGEon the stock. Our last rating was a 'Hold' with a fair value estimate of S$0.195. (Wong Teck Ching Andy) City Developments Limited: 2Q13 PATMI up 48% YoY Summary: CDL's 2Q13 PATMI increased 48% YoY to S$203.8m, mostly due to disposal gains from several industrial property assets. 1H13 PATMI now cumulates to S$341.5m which makes up 49% of our full year forecast. We judge this to be mostly in line with our expectations. Residential sales performances remain firm, with 2013 launches D'Nest, Bartley Ridge and Jewel@Buangkok showing healthy sell-through rates to date. In 2H13, the group expects to launch a mixed use JV project at the junction of Upper Serangoon Rd and MacPherson Rd near Potong Pasir MRT. Hotel subsidiary Millennium and Copthorne Hotels' (M&C) 2Q13 PATMI decreased 17.7% YoY as 181k net rooms were taken out of the supply due to enhancement works. 1H13 global REVPAR, however, was up 4.1% to GBP71.27; AOR and ARR increased by 0.7 ppt and 3.1%, respectively. The group also announced a special interim dividend of 8 S-cents per share. Maintain HOLDon CDL with our fair value estimate of S$12.04 (15% RNAV disc.) under review. (Eli Lee)

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

NEWS HEADLINES

- US stocks mostly fell on Mon because of a report indicating above-expectations growth in the service sector and a Fed official's remarks that the Fed is closer to curbing its asset purchases. - Singapore Exchange Ltd is relying on derivatives for growth amid a dearth of merger and acquisition candidates in Asia. - The Singapore Mercantile Exchange (SMX) has come out to say that it is not impacted by the troubles of its sibling, the National Spot Exchange Ltd. - A disposal gain of S$18m from the sale of Central Plaza in May 2013 gave Forterra Trust a liquidity boost and helped lift its 2Q13 net profit to a 41.7% YoY rise to S$24.2m. - Hiap Hoe has recommended a record high interim dividend of 1.2 S-cents per share, after seeing its 2Q13 earnings surge 75.9% YoY.

SG: MARKET PULSE: KSH, Yoma, Valuetronics, Sembcorp Marine, SIA (28 May 2013)

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.73

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.87

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.195

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.64

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: SELL

Target Price: 10.00

MARKET PULSE: KSH, Yoma, Valuetronics, Sembcorp Marine, SIA

28 May 2013

KEY IDEA KSH Holdings: A strong year of performance Summary: KSH reported 4QFY13 PATMI of S$14.0m, up 85% YoY mostly due to an increase in profit contributions from development projects held by its associates and JVs. On a full year basis, FY13 PATMI is S$36.3m which increased a strong 98%. We judge this to be somewhat above our expectations (our FY13 PATMI forecast is S$30.7m) as the pace of revenue recognition at JV development projects came in faster than anticipated. Management proposed a final dividend of 1.15 S-cents per share. Likely catalysts ahead includes major pipeline launches at Hong Leong Garden (NeWest), King Albert Park and Seletar Garden which would all likely take place this year. In China, KSH's 45% Beijing condo project could also begin sales this year. We view a potential firm performance at this project to be significant for KSH's earnings profile which could sustain earnings growth into FY15 by contributing an estimated S$23m net earnings upon TOP. Maintain BUY with an unchanged fair value estimate of S$0.73. (Eli Lee) MORE REPORTS Yoma Strategic Holdings: Catalysts ahead - upgrade to HOLD Summary: Yoma reported 4QFY13 PATMI of S$11.5m, up 452% YoY mostly due to a S$9.1m one-time gain. FY13 PATMI cumulates to S$14.4m and, excluding one-time gains, is judged to be generally in line with our forecast. We see the completion of the Landmark Project acquisition as a key catalyst for the share price ahead but note that management has raised the possibility of another deadline extension. That said, the signing of a Heads of Agreement with the Hong Kong and Shanghai Hotels Group and other preparations by Yoma for site development points to a good level of confidence that they would acquire the site eventually, in our view. Sales at launched projects remain firm, with 491 out of total 528 units sold in buildings 3 and 4 at Star City. In addition, management showed a strong deal-making record in FY13 and is in the midst of acquiring more land sites and establishing businesses in tourism, retail, agriculture and automobiles. Upgrade to HOLD with an increased fair value estimate of S$0.87 (20% premium to RNAV), versus S$0.71 previously, as we incorporate firmer valuations for the Landmark Project and Yoma's existing land bank into our model. (Eli Lee) Valuetronics Holdings: Starting on a fresh page Summary: Valuetronics Holdings Limited's (VHL) FY13 results were within our expectations. Revenue from continuing operations fell 3.4% to HK$2,210.2m, or just 0.6% shy of our forecast. Net profit from continuing operations fell 26.1% to HK$118.4m, while net losses from its now discontinued Licensing division widened by 32.7% to HK$39.8m, resulting in overall PATMI decline of 39.6% to HK$78.7m. Excluding exceptional items, we estimate that core PATMI for FY13 fell 14.7% to HK$103.7m (1.1% above our estimate). VHL also slashed its FY13 DPS from HK$0.17 to HK$0.08. This was below our HK$0.11/share forecast but still translates into a decent yield of ~6.0%. We foresee an improvement in VHL's bottomline and DPS in FY14 as it does not expect to incur any further expenses for its Licensing business. We maintain our HOLD rating but raise our fair value estimate slightly from S$0.19 to S$0.195 due to a marginal 2.7% increase in our FY14 core PATMI forecast. (Wong Teck Ching Andy) Sembcorp Marine: Secures US$596m jack-up rig order from Noble Summary: Sembcorp Marine (SMM) announced that subsidiary Jurong Shipyard has secured a US$596m contract for a newbuild ultra-high spec jack-up rig for use in the United Kingdom sector in the North Sea from Noble Corporation. There is also an option for an additional unit. Calling it the "most advanced and versatile of its kind in the industry", this rig will be constructed based on the Gusto MSC CJ70 design, and is in line with an enhanced version of Statoil's "Cat J" specifications. Indeed, we note that the last Gusto MSC CJ70 order secured by SMM had a price tag of US$450m in Mar 2011. With this latest win (scheduled for delivery in 1Q16), SMM has secured orders about US$2.4b YTD, accounting for around 60% of our full-year estimate. Maintain BUY with S$5.64 fair value estimate. (Low Pei Han) Singapore Airlines - Grounds another cargo plane Summary: Singapore Airlines (SIA) announced that it will park another cargo freight plane until May 2014 in an effort to cut its cargo capacity further. This will be the second freighter taken out of service with the first pulled out in Dec 2012. As a recap, in its recent FY13 results, SIA Cargo experienced an operating loss for its second straight year. While the move is a welcomed one in light of the weak air cargo market, particularly in Asia-Pacific, we still expect operating losses for the division in FY14 and assert that a turnaround is unlikely even with capacity cuts as cargo yields remain depressed. Overall, SIA as a group continues to face competitive pressures from other premium carriers, and management has yet to take any concrete steps to invigorate its business prospects. Therefore, we maintain our SELL rating on SIA with an unchanged fair value estimate of S$10.00. (Lim Siyi)

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

NEWS HEADLINES - Healthway Medical Corp will issue up to 97.5m new shares to raise as much as S$10m to fund its expansion plans in China and its obligations in an associate company that is eyeing a listing. - Soilbuild Construction Group enjoyed a strong debut yesterday, with shares closing up 44% at 36cts. - Technics Oil and Gas Limited has been awarded contracts worth a total of S$10.6m for the supply of Air Spread Systems from Singapore. - Hiap Seng Engineering has reported a net loss of S$4.5m for 4Q13, a widening from the S$2.2m for the same period last year. - Fragrance Group has signed a mandate letter for a S$1b multicurrency medium term note programme. - Business receipts for the services industry in Singapore rose 6.3% YoY in 1Q13, said Singapore's Department of Statistics yesterday.

Market Pulse: SIAEC, Valuetronics, FEHT, Karin, Yangzijiang, DBS, CDL (6 Feb 2013)

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

Research House: OCBC

Price Call: HOLD

Target Price: 4.38

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.19

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

Research House: OCBC

Price Call: HOLD

Target Price: 1.02

Stock Name: Karin
Company Name: KARIN TECHNOLOGY HLDGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.25

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.95

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 15.94

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 13.01

MARKET PULSE: SIAEC, Valuetronics, FEHT, Karin, Yangzijiang, DBS, CDL

6 Feb 2013

KEY IDEA SIA Engineering: 9MFY13 slightly below expectations SIA Engineering Company's (SIAEC) 9MFY13F results were slightly below our expectations. Revenue increased by 1.1% to S$863.2m, chiefly due to an increase in materials and line maintenance revenue. Operating profit thus stayed roughly flat (+0.1% YoY) at S$97.2m. Share of profits from associated and JV companies increased by 0.3% to S$118.8m, representing a contribution of 51.5% of the group's pre-tax profits. PATMI was up 0.7% YoY to S$204.2m. This formed 72.6% of our previous FY13F estimate of S$281.4m, which we now reduce to S$274.0m. Still using a P/E peg of 17.1x and our basic EPS forecast of 25.6 S cents for 4QFY13F-3QFY14F, we reduce our fair value estimate from S$4.48 to S$4.38 and maintain our HOLD rating on SIAEC. (Sarah Ong) MORE REPORTS Valuetronics Holdings: Another challenging quarter Valuetronics Holdings Limited's (VHL) 3QFY13 results were below our expectations. Revenue from continuing operations fell 16.3% YoY to HK$508.1m, or 10.5% below our forecast. Estimated core PATMI declined 17.9% to HK$23.9m and fell short of our projection by 16.2%. This was driven by a slowdown in demand from some of its customers, while ASP pressures also exacerbated the challenging operating conditions. On a positive note, VHL ended the Dec-quarter with a healthy net cash balance of HK$234.7m, which would act as a buffer in light of the still uncertain macroeconomic environment. We pare our FY13 and FY14 revenue forecasts by 5.0% and 4.3%, and our core PATMI projections by 9.3% and 7.4%, respectively. We also roll forward our valuations to 4x FY14F EPS, and our fair value estimate is lowered from S$0.20 to S$0.19. Maintain HOLD. (Wong Teck Ching Andy) Far East Hospitality Trust: Results in line for 1 Aug 2012-31 Dec 2012 Far East Hospitality Trust (FEHT) reported its first results since listing for the financial period 1 Aug 2012-31 Dec 2012 that were generally in line with our expectations (the actual results are from 27 Aug to 31 Dec 2012 since FEHT was listed on 27 Aug 2012). While gross revenue, at S$42.2m, was 0.7% lower than the pro-rated forecast in the prospectus, net property income of S$38.8m was 0.2% higher than the forecast as a result of lower operating expenses. Active management of finance costs and other trust expenses helped to lift its income available for distribution 4.5% above its forecast to S$33.6m. We maintain our HOLDrating on FEHT and put our fair value of S$1.02 under review. We will be meeting management shortly. (Sarah Ong) Karin Technology: 1HFY13 core PATMI within expectations Karin Technology's (Karin) 1HFY13 revenue exceeded our expectations but core PATMI was in line due to lower-than-expected gross margin. Revenue surged 39.7% YoY to HK$2,123.3m and formed 54.4% of our FY13 forecast. Reported PATMI jumped 47.5% YoY to HK$33.7m. However, after adjusting for exceptional items, we estimate that core PATMI came in at HK$26.8m (+5.1% YoY) and constituted 50.1% of our full-year projection. Karin's robust topline growth was driven largely by its Consumer Electronics Products segment, which reported a 56.7% increase in sales, although this also resulted in margin compression given the high volume, low margin nature of the business. Karin declared an interim dividend of 7.2 HK cents/share, higher than the 7 HK cents/share in 1HFY12 (3.5 HK cents of interim and special DPS each). Karin also returned to a net cash position of HK$69.4m in 1HFY13 (2HFY12: net debt of HK$31.7m), aided by strong free-cashflows generated of HK$99.7m. We will provide more updates after speaking with management. We maintain our HOLD rating on Karin but our S$0.25 fair value estimate is under review. (Wong Teck Ching Andy) Yangzijiang Shipbuilding: Ups stake in Xinfu yard Yangzijiang Shipbuilding (YZJ) announced last evening that it has acquired an additional 20% interest in Jiangsu Yangzi Xinfu Shipbuilding for US$18m (~RMB 112.1m). Following this, YZJ will hold an 80% interest in the Xinfu yard, which has a huge production area of about 166ha (YZJ's old yard: 20ha, new yard: 201ha, Changbo yard: 29ha) and is therefore ideal for building large vessels. As mentioned by management previously, the group has plans to build VLCCs, large containerships (e.g. 10,000 TEU) and other vessels in this yard. Meanwhile, YZJ has also acquired the remaining balance of 40% interest in Shanghai Henggao Ships Design Co for RMB6m. The latter is engaged in the detail and production design for merchant ships. These acquisitions are still relatively small in comparison to the group's cash position - YZJ had net cash and held-to-maturity assets of RMB2.6b as at Sep 2012. Maintain HOLD with S$0.95 fair value estimate on YZJ. (Low Pei Han) DBS: Slightly below expectations 4Q DBS posted 4Q12 net earnings of S$760m this morning (excluding divestment gains of S$450m), and this is slightly below market expectations of S$788m (based on Bloomberg poll). For the full year, net earnings came in at S$3,360m (+17.4% excluding divestments or S$3,809m including divestment gains). The board has declared a final dividend of 28 cents, bringing full year payout to 56 cents per share (same as 2011), and the shares will be quoted ex-dividend on 13 May 2013. Loans grew 8% from end 2011 or 4% from 3Q12 to S$210.5b. Net Interest Margin continued to ease off, down from 1.73% in 4Q11 and 1.67% in 3Q12 to 1.62% in 4Q12. For the year, double-digit declines in Stockbroking and Investment Banking due to weak equity markets were compensated for by double-digit gains for Wealth Management and Cards. We will provide more updates after the results briefing. Do note that our previous call on the stock was a BUY with a fair value estimate of S$15.94. We will review our estimates after the briefing. (Carmen Lee) City Developments Limited: Top bid at GLS tender for Commonwealth Ave site Yesterday evening, City Developments (CDL) was part of a consortium that put in the top bid of S$562.8m at a GLS tender for a residential site at Commonwealth Ave. We understand that CDL would have a 30% stake in this project. The tender attracted three bidders in total, and CDL's bid was 2.4% above that of the second highest bidder. The site has a land area of 12.1k sqm and a maximum GFA of 59.2k sqm, and is across the street from the Queenstown MRT station - an attractive location. We estimate breakeven and selling ASPs of S$1.35k psf and S$1.6k psf, respectively, for the 99-year condominium project with ~700 units and expect this transaction to accrete 4 S-cents to CDL's RNAV. Recent transactions over the last twelve months at Alexis, the last private condominium (freehold) launched in that area, were at ASPs of S$1.65k psf. Maintain HOLD on CDL with our fair value estimate of S$13.01 (15% discount to RNAV) under review. (Eli Lee)

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

NEWS HEADLINES - US stocks rebounded on Tue to recoup much of Mon's losses, boosted by news of a leveraged buyout of computer maker Dell. The Dow rose 0.7% to 13,979.30, the S&P 500 index gained 1% to 1,511.29 and the Nasdaq ended 1.3% higher at 3,171.58. - FJ Benjamin Holdings' 2Q13 net profit fell 73% YoY to S$1.3m as turnover slid 12% to S$97m, due to lower revenue from its operations in North Asia and weaker spending in Singapore and Malaysia during the festive season. - Stamford Land Corp's 9M13 net profit fell 47% YoY to S$18.6m, as turnover slid 53% to S$196m, due to a plunge in revenue from its property development segment. - Lorenzo International, Ziwo Holdings and Sinotel Technologies each separately warned of full-year losses for 2012 while United Food Holdings said it will report a loss for 4Q12.

MARKET PULSE: Astro Malaysia, Starhill Global, Valuetronics, United Envirotech (5 Feb 2013)

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 0.95

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.20

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.67

MARKET PULSE: Astro Malaysia, Starhill Global, Valuetronics, United Envirotech

5 Feb 2013

KEY IDEA Astro Malaysia: Proxy to Malaysia's rising income/spending Astro Malaysia Holdings Berhad (Astro), the largest Pay TV operator in Malaysia (with a 99% market share in 2011), looks well-positioned to capitalise on the potential growth of the Malaysian economy and a young population demography that is open to the adoption of new technologies. And because of its steady stream of cash receipts, we believe that Astro could be seen as a dividend play. Given its stable cashflow, we believe that using a DCF (discounted cashflow) model to value the company would be appropriate. Based on our assumptions, we derive a fair value of MYR2.98. And coupled with a stable dividend yield of 3.5%, we expect Astro to generate a total return of 10.3% over the next one year; hence, we initiate coverage on the stock with a BUY rating. (Carey Wong) MORE REPORTS Starhill Global REIT: Asset sale a positive move Starhill Global REIT (SGREIT) announced that it had divested its entire interest in the Roppongi Primo Building in Tokyo, Japan for JPY700.0m (~S$9.5m). We welcome the move because 1) the divestment is likely to lead to an improvement in both occupancy and yield, 2) it may mean that its Japan properties are starting to gain investor interest, and 3) it is expected to reduce its gearing level by 30bps to 30.0% since the net proceeds would be used to repay its JPY loans. Going forward, we remain positive that SGREIT will continue to turn in firm performance, supported by strong contribution from its Singapore portfolio and incremental income from its recently acquired Plaza Arcade property in Perth. We also believe that upcoming refinancing activities and rental valuation for the Toshin master lease may provide a further catalyst for its DPU growth if favourable interest rates and rental terms are secured. We now factor in the divestment in our forecasts. Our fair value, however, remains unchanged at S$0.95. Maintain BUY on SGREIT. (Kevin Tan) Valuetronics Holdings: 3QFY13 core earnings below expectations Valuetronics Holdings Limited (VHL) reported its 3QFY13 results this morning. Revenue from continuing operations fell 16.3% YoY to HK$508.1m, or 10.5% below our forecast. Profit from continuing operations dipped 41.8% YoY to HK$25.6m. Adjusting for exceptional items, we estimate core PATMI of HK$23.9m, a 17.9% YoY decline, and this fell short of our projection by 16.2%. VHL continued to incur operating losses (HK$1.1m) from its Licensing division, but this was a significant reduction from 2QFY13 (HK$31.2m) which includes HK$28.0m worth of one-off termination expenditure and impairment charges given its decision to cease operations of the division. We expect VHL's outlook to remain challenging, as margin pressure from rising labour costs and slower growth from its largest customer are likely to weigh at least in the near term. We will provide more details after a teleconference call with management. We maintain our HOLDrating but our S$0.20 fair value estimate is currently under review. (Wong Teck Ching Andy) United Envirotech: Very strong 9M13 showing United Envirotech Ltd (UEL) put in a strong set of 9MFY13 results, with net profit jumping 145.7% to S$22.5m, meeting 95% of our full-year forecast, after revenue surged 108.9% to S$138.2m, also 95% of our FY13 estimate. 3QFY13 revenue was up 159.4% at S$32.2m, while net profit was up 350.2% at S$8.5m. According to management, the strong showing came from higher engineering and treatment revenue over the period. Going forward, UEL says it will continue to expand its recurring income by investing in more water treatment projects in China. Funding should also not be an issue given that KKR will be injecting another US$40m into the company following the recent share placement. We will be speaking with management for more insights. We are keeping our BUY rating and will review our S$0.67 fair value after our discussion with management. (Carey Wong)

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

NEWS HEADLINES - US stocks fell on Mon in their worst drop so far this year, as investors fretted anew over Europe's problems. The Dow slid 0.9% to 13,880.08, the S&P 500 index fell 1.5% to 1,495.71 and the Nasdaq ended 1.5% lower at 3,131.17. - Singapore's purchasing managers' index (PMI) rose to 50.2 in Jan from 48.6 in Dec, signalling a marginal expansion of the manufacturing sector for the first time in seven months. - Global Logistic Properties and Canada Pension Plan Investment Board are each pumping a further 29b yen into their joint venture, GLP Japan Development Venture, set up to develop modern logistics properties in Japan. - Wing Tai Holdings' net profit surged to S$88.7m in the three months ended 31 Dec, from S$34.2m a year ago, supported by a 73% rise in revenue to S$321.8m. - HSR Global Ltd and Huan Hsin Holdings have each separately warned of full year losses for 2012 ahead of their release of results. - Sim Lian Group's net profit for the three months ended 31 Dec rose 35% YoY to S$48m, supported by a 64% surge in turnover to S$208m.

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)

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

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 9.22

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

Research House: OCBC

Price Call: BUY

Target Price: 0.29

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.28

Stock Name: UOL
Company Name: UOL GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 5.48

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 13.10

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.06

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.21

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

9 Nov 2012

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

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

NEWS HEADLINES - US stocks extended losses for a second day despite upbeat data showing that jobless claims fell last week, as investors fretted about the looming fiscal cliff and Europe's troubles. The Dow fell 0.9% to 12,811.32, while the S&P 500 Index slid 1.2% to 1,377.51 and the Nasdaq 1.4% lower at 2,895.58. - The ECB held its main interest rate at 0.75%. The euro zone's economy is weak and not improving, ECB president Mario Draghi warned. - Sim Lian Group's 1Q13 PATMI slumped 64% YoY to S$37.4m as revenue fell 28% to S$190m, mainly due to lower revenue contribution from two projects that obtained their TOP a year earlier. - GP Batteries' 2Q13 PATMI fell 88% YoY to S$0.3m as revenue slid 1% to S$200m, mainly due to lower sales in Europe. Its bottom line was also hurt by losses at associates and foreign exchange losses due to a weaker US$. - Food Junction Holdings' 3Q12 net loss attributable to shareholders widened to S$5.4m, from S$0.8m a year ago, as revenue declined 0.6% to S$13.9m, mainly due to permanent and temporary closures of some food courts.

MARKET PULSE: Marco Polo Marine, COSCO, Oil & Gas, UE E&C, Valuetronics, United Envirotech (7 Aug 2012)

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

Research House: OCBC

Price Call: BUY

Target Price: 0.53

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

Research House: OCBC

Price Call: BUY

Target Price: 0.71

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.315

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.40

MARKET PULSE: Marco Polo Marine, COSCO, Oil & Gas, UE E&C, Valuetronics, United Envirotech

7 Aug 2012

KEY IDEA Marco Polo Marine: Proving its mettle in ship repair Marco Polo Marine (MPM) reported a 32% YoY fall in revenue to S$14.4m but saw a 104% rise in net profit to S$8.9m in 3QFY12, such that its results were above our expectations. Higher gross profit margins and a reversal of share of losses in BBR helped to boost net profit by 110% QoQ. The group has seen an increase in enquiries for ship repair, outfitting and conversion services. As for the chartering side, MPM expects charter rates for offshore vessels as well as tugs and barges to remain stable. We have tweaked our estimates to incorporate higher margin assumptions as well as BBR's new functional currency. Rolling over our valuation to 8x blended FY12/13F earnings, our fair value estimate rises to S$0.53 (prev. S$0.43). Meanwhile, the stock has fallen by about 18% since its last high in mid Mar. Upgrade to BUY. (Low Pei Han) MORE REPORTS COSCO Corp: Operating environment remains unfavourable COSCO Corp (COSCO)'s net profit attributable to shareholders decreased by 13% YoY to S$27.6m (2Q11: S$31.9m) such that 1H12 net profit formed 50% and 43% of ours and the street's full year estimates. 2Q gross profit jumped 56% YoY to S$117.4m (2Q11: S$75.1m) due to higher contribution from ship repair, conversions and marine engineering, but the gains were offset by lower other income and higher net interest expense. In our view, a quick turnaround is unlikely. Without an established track record, COSCO may need to bid for jobs at low margins or with back-loaded payment schedules, resulting in higher balance-sheet risks. Furthermore, the group remains vulnerable to cost over-runs for its offshore contracts. Maintain SELL rating with unchanged S$0.84 fair value estimate. (Chia Jiunyang) Oil & Gas sector: Sete Brasil's orders firming up Keppel Corporation (KEP) announced that it has firmed up contracts with Sete Brasil for the design and construction of five additional semi-submersible drilling rigs worth about US$4.1b, following the letter of intent announced in Apr this year. With these latest contracts, KEP will be building a total of six DSS 38E semis for Sete (recall that the group won a contract to build one semi in Dec 2011, scheduled for delivery in 4Q15). In a similar vein, we expect Sembcorp Marine to firm up its drillship contracts with Sete soon; Upstream reported on 12 Jul that Jurong Shipyard has so far signed a contract to build a single drillship (US$792.5m contract announced Feb this year) for Sete with a letter of intent signed for six more. Maintain BUY on KEP and SMM with fair value estimates of S$13.34 and S$5.69, respectively. (Low Pei Han) UE E&C: 2Q11 net profit flat at S$6.4m UE E&C reported its 2Q12 results last evening. During the quarter, revenue grew 29% YoY to S$85.5m and was within our expectations. However, 2Q net profit was flat at S$6.4m (or +1% YoY) and slightly below our estimates. Nonetheless, we note that quarterly revenue recognition for construction projects is typically very lumpy. The group's balance sheet remains strong, with net cash of S$100m. We will be speaking with management later for an update. In the meantime, we put our buy rating at 0.71 fair value estimate UNDER REVIEW. (Chia Jiunyang) Valuetronics Holdings: 1QFY13 PATMI below expectations Valuetronics Holdings Limited (VHL) reported its 1QFY13 results this morning. Revenue of HK$634.5m (+20.4% YoY) was within our expectations but PATMI of HK$25.7m (-18.7% YoY) missed our estimates due to lower-than-expected gross margin. Topline and bottomline for 1QFY13 formed 23.8% and 18.8% of our full-year estimates, respectively. VHL reclassified its three reportable segments into Consumer Electronics (CE), Industrial and Commercial Electronics (ICE) and Licensing this quarter, given the blurring differences between its previous OEM and ODM segments. Strong YoY revenue growth of 36.9% in the CE segment was partially offset by weakness from its ICE (-9.0%) and Licensing (-50.4%) segments. What surprised us was management's decision to cease its Licensing business given significant challenges from a tepid US economy as well as strong competition. We had previously estimated this segment to achieve breakeven in FY14. VHL expects to incur total termination expenditure of HK$28m, which would be booked in 2QFY13. We place our Buy rating and S$0.315 fair value estimate under review pending an analyst briefing with management tomorrow. (Wong Teck Ching Andy) United Envirotech: Good start to FY13 United Envirotech Limited (UEL) reported 1QFY13 revenue surging 54.2% to S$20.8m, meeting about 20% of our FY13 estimate, with the start of several new projects secured over the past few months. Net profit jumped 66.3% to S$5.9m, or 25% of our full-year forecast, also aided by the increasing treatment revenue, which comes with much higher margins. Going forward, management expects its growth momentum to outperform FY12, buttressed by its recent contract wins. We will be speaking with management to get more insights into its M&A strategy. For now, we maintain our BUY rating but place our S$0.40 fair value (based on 12.8x FY13F EPS) under review. (Carey Wong)

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

NEWS HEADLINES - US stocks rose Monday, ending at their highest in three months, as better-than-expected corporate earnings and reduced concern about Eurozone's debt problems improved sentiment. The Dow rose 0.2% to 13,117.51 and the S&P 500 Index climbed 0.2% to 1,394.23. - Toll-road operator China Merchants Holdings is acquiring Ningbo Beilun Port Expressway, a four-lane carriageway, 51.4km expressway located in Zhejiang province, China, for a maximum purchase price of ~S$251m. - Yeo Hiap Seng's 2Q12 net profit fell 16% YoY to S$12.35m despite revenue rising 10.7% to S$126.3m. Net profit from the F&B segment had fallen from S$4.51m to S$0.94m. - Singapore Exchange has acquired a 49% stake in Energy Market Company Pte Ltd, the operator of Singapore's wholesale electricity market, for up to S$19.6m. - Loyz Energy has proposed a share placement of 12m new shares at 31 S cents apiece to raise net proceeds of S$3.6m.

MARKET PULSE: Tat Hong, Valuetronics, Bumi Armada (29 May 2012)

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

Research House: OCBC

Price Call: BUY

Target Price: 1.21

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.315

Stock Name: Armarda
Company Name: ARMARDA GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.57

MARKET PULSE: Tat Hong, Valuetronics, Bumi Armada

29 May 2012

KEY IDEA Tat Hong Holdings: Recovery gaining pace Tat Hong Holdings (TAT) reported a good set of 4Q12 and FY12 results that were above consensus' estimates but within our expectations. FY12 revenue grew by 23% to S$720m (FY11: S$584m), while net profit attributable to shareholders jumped by 63% to S$42m (FY11: S$32m). Gross margins improved to 36.5% (FY11: 35.7%) due to better rental rates and higher utilizations of its cranes. With improved outlook, we raised our valuation peg to 10x (previously 9x) and fair value estimate to S$1.21 (previously S$1.09). Maintain BUY. (Chia Jiunyang) MORE REPORTS Valuetronics Holdings: Good results, attractive dividends Valuetronics Holdings Limited (VHL) ended FY12 with a reported net profit of HK$130.3m (+7.5%) on the back of a 20.7% growth in revenue to HK$2.38b. Net profit exceeded our forecasts by 8.7% but revenue tracked closely to our estimates. A 17 HK cents dividend (including a special dividend of 1 HK cent) was declared, its highest ever since its IPO. This translates into an attractive yield of 11.0%. Looking ahead, we expect momentum from its largest customer to continue, although we are also expecting sluggishness from its major ODM customers. As the macroeconomic outlook remains uncertain, we opine that VHL's focus to effectively manage its working capital and increase its operating cashflows is a prudent move. We raise our FY13 net profit estimates by 2.1%, and our fair value inches up accordingly from S$0.31 to S$0.315. Maintain BUY. (Wong Teck Ching Andy) Bumi Armada: 1Q net profits of M$335m Bumi Armada Berhad (BAB) reported its 1Q12 results that were generally below our's and the consensus' expectations. 1Q12 revenue decreased by 11% YoY to M$335m (1Q11: M$376m), but net profit attributable to shareholders increased by 9% YoY to M$90m (1Q11: M$82m). We lowered our FY12F earnings by 18% to account for the 1Q results and the lack of new FPSO contracts secured year-to-date. In line with the recent market de-rating, we also adjusted our valuation peg to 20x (previous 25x) and cut our fair value estimate to M$3.57 (previously M$4.75). Maintain HOLD. (Chia Jiunyang)

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

NEWS HEADLINES - The euro rose 0.2% to US$1.2538 at 4 p.m. New York time, rebounding from a four-day losing streak, as polls indicated that Greece's pro-bailout parties were gaining support. The Stoxx Europe 600 Index closed down 0.1%. - China has unveiled detailed rules regarding subsidies for purchases of energy-efficient TV and aircons. The Ministry of Finance projects that the subsidies will increase consumption by ~US$21.3b. - Boustead Singapore reported a S$32.4m net profit for 4Q12, versus a net loss of S$1.0m a year ago. The previous loss was because of provisions made for a contract in Libya which was suspended last year due to civil unrest. - Sembcorp Industries has completed the acceptance test for its US$1b independent water and power plant in Oman. With the third and final phase complete, the plant will commence full operations. - Yongmao Holding posted a 4Q12 loss of RMB39.9m, despite revenue climbing 31% YoY to RMB142.6m.

MARKET PULSE: Ezion, Technology Sector, Sembcorp Marine & ST Eng (5 April 2012)

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.21

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.31

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.41

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: HOLD

Target Price: 5.70

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

Research House: OCBC

Price Call: BUY

Target Price: 3.32

MARKET PULSE: Ezion, Technology Sector, Sembcorp Marine & ST Eng

5 April 2012

KEY IDEA Ezion Holdings: Secures yet another service rig contract Ezion announced that it has secured a charter contract worth US$80m to provide a service rig over a four-year period in the Gulf of Mexico and is expected to be working by 4Q12. We are positive on this due to the decent forecasted ROE, management's previous working relationship with the customer, as well as the project's ability to generate a steady stream of earnings within a short period of time, barring any hiccups. We tweak our estimates, and based on 10x blended FY12/13F core earnings, raise our fair value estimate to S$1.21 (prev. S$1.05). The stock has risen 52% YTD, and is now at a 44-month high since Jul 07. However, given an estimated upside potential of about 21%, we maintain our BUYrating. (Low Pei Han) MORE REPORTS Technology Sector: Likely tale of two halves We believe that 1QCY12 could be a point of inflection for the tech sector. We are expecting a gradual improvement in industry conditions from 2QCY12, with a more significant recovery in 2HCY12. Latest industry data has provided optimism on the outlook of the tech sector, but we believe that pockets of uncertainty remain in the macro economy, while cost pressures could also pose a dampener to corporate growth. As such, we maintain NEUTRAL on the tech sector. We advocate investors to be selective on stocks within the sector. Besides Valuetronics Holdings [BUY; FV: S$0.31], we add Venture Corp [BUY; FV: S$9.41] to our preferred picks following our upgrade on 3 Apr 2012. Both companies are run by strong management teams, offer an attractive dividend yield, and are in a healthy financial position. (Wong Teck Ching Andy) Sembcorp Marine: Secures US$218.5m jack-up order Sembcorp Marine (SMM) announced that PPL Shipyard has secured a US$218.5m contract to build a jack-up rig for Gulf Drilling International. The unit will come with accommodation for 150 persons, and be able to operate in water depths of up to 400ft and drill to a depth of up to 30,000ft. The rig is scheduled for delivery in 1Q13, and will be built based on PPL's Pacific Class 400 design. We note that Gulf Drilling had earlier ordered two KFELS B Class Bigfoot jack-ups from Keppel in May last year for US$393m which will be delivered in 3Q13 and 3Q14. The short delivery time for this latest rig by SMM should mean that construction of the rig has been underway. Besides semi-sub orders, jack-up work is still streaming in, attesting to the positive outlook of the industry. Meanwhile, SMM has clinched about S$2.7b worth of new orders this year, accounting for 31% of our S$8.7b full-year estimate (inclusive of Petrobras orders). Maintain HOLD with S$5.70 fair value estimate. (Low Pei Han)

ST Engineering: Electronics arm won S$100m of contracts ST Engineering (STE) announced that its electronics segment has won a total of ~S$100m of new contracts in 1Q12. The new contracts included S$67m secured by STE's subsidiary VT iDirect to provide satellite communications systems to customers. Meanwhile, Singapore's Land Transport Authority awarded a contract to a consortium, comprising of STE and its partners, to design, supply, test and commission the onboard equipment for the additional 16 trains of the Circle Line of Singapore's mass rapid transit network. STE's portion of the contract is worth S$27m. At the end of FY11, STE reported a robust order book of S$12.3b. We maintain our BUY rating and fair value estimate of S$3.32/share on STE. (Eric Teo) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - The S&P 500 Index fell 1%, its second-biggest decline of the year, as a weak Spanish bond auction triggered a global stock selloff. - Keppel Corp.'s subsidiary Keppel Shipyard announced that it has won two FPSO projects worth S$170m. - Otto Marine's wholly owned subsidiary Otto Ventures is capitalising its A$15m (~S$19.4m) loan to its subsidiary Go Marine Group Pty. Ltd. Consequently, Otto Ventures will own a 92.6% stake. - Eastgate Technology expects to report a loss for the half year ended Feb 2012 due to longer than expected negotiations on the novation of a lease and under-provision for prior years taxes. - The couple behind the roast duck chain Dian Xiao Er has agreed to buy out Catalist-listed Soup Restaurant Group's stake in the chain for S$7.9m.

Valuetronics Holdings rated 'buy' by UOB KayHian

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 0.29

UOB KayHian in a Feb 7 research report says: "Valuetronics Holdings (VHL) reported 3QFY12 net profit of HK$31.5 million, down 0.3% y-o-y. Excluding the impact of net realised exchange gains, 3QFY12 net profit declined 16.6% y-o-y to HK$26.9 million, in line with our estimates.

"9MFY12 net profit of HK$91.9 million comprises 78.2% of our full-year forecast. Gross profit margin for 3QFY12 fell to 13.6% from 15.5% in the previous period, largely due to a change in product mix.

"We maintain our earnings estimate for FY2012-2013. Target price of 29 cents (previously 30 cents), implying 18.4% upside to our target price. Our target price is based on 5.5x FY12 PE, which is 67.3% below the peer average FY12 PE of 16.8%. MAINTAIN BUY."

MARKET PULSE: Noble, Valuetronics, A-REIT, Tee and CSE Global (07 Feb 2012)

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.46

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.31

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.30

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.31

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.06

]

MARKET PULSE: Noble, Valuetronics, A-REIT, Tee and CSE Global

7 Feb 2012

KEY IDEA Noble Group Ltd: Upgrade to HOLD with S$1.46 fair value Summary: Noble Group (Noble) unveiled its new CEO - Mr Yusuf Alireza - who will start his appointment on 16 Apr. Mr Alireza, formerly of Goldman Sachs, has been one of the fore-runners for the post and the appointment does not come as a total surprise. Meanwhile, the current price recovery (up 27% YTD) seems to have factored in most of the positives, including the appointment of a new CEO. Hence, we are only upgrading our call to HOLD, albeit with an improved S$1.46 fair value. We would be buyers closer to S$1.30. (Carey Wong) MORE REPORTS Valuetronics Holdings: Revenue boost from major customer Summary: Valuetronics Holdings Limited (VHL) reported 3QFY12 earnings which exceeded our expectations. Revenue rose 17.7% YoY to HK$617.2m, while net profit was flat at HK$31.5m. Adjusting for forex and one-off items, we estimate we estimate that core net profit for 3QFY12 would instead have declined 13.8% YoY and increased 24.1% QoQ, but still higher than our expectations. This was driven by strong revenue contribution from its largest OEM customer, which more than buffered the slowdown in demand from some of its other major OEM customers and ODM segment. Looking ahead, management remains cautious on the uncertain macroeconomic landscape and rising cost pressures. But we expect strong contribution from its largest customer to continue, and believe that VDL can cope with rising cost pressures via constant efforts to improve its production efficiencies. We finetune our assumptions and derive a higher fair value estimate of S$0.31 (previously S$0.29) after rolling forward our valuation to 5x FY13F EPS. Maintain BUY given attractive valuations. (Wong Teck Ching Andy) Ascendas REIT: Acquires three Science Park properties Summary: Ascendas REIT (A-REIT) yesterday proposed to acquire three properties (Cintech I, Cintech II, Cintech III and Cintech IV) at Science Park Drive from Ascendas Land for a purchase consideration of S$183.0m. According to management guidance, the properties are expected to generate an NPI yield of 7.3% and add another 0.16 S cent to DPU (assuming 50% of the purchase consideration is satisfied by new unit issue). We are positive on this development as 1) the acquisitions are expected to be yield accretive; 2) further strengthen A-REIT's presence in the Science Park segment; and 3) provide further income diversification. Occupancy rates for the properties, we note, are also healthy at 90.9-100%. A-REIT proposed to fulfill the acquisitions by making partial payment via issue of new units to Ascendas Land amounting to not more than 50% of the purchase price, or S$91.5m. As the investment and unit issue constitute an interested party transaction and a placement to a substantial unitholder respectively, unitholders' approval had to be obtained at the EGM to be convened in due course. We are holding off adjusting our fair value of S$2.30 pending the outcome of EGM. For now, maintain BUY. (Kevin Tan) TEE International: New contracts awarded Summary: TEE International (TEE) announced that it has secured five new contracts, worth a total of approximately S$12.7m, and this brings their outstanding total order book to S$292.3m. The largest contract of the five new additions is worth S$10.1m and it was awarded by CapitaLand Retail Project Management for alteration and additional works on the existing building Bishan Junction 8. Three of the five new contract wins relate to overseas projects and this lends support to our optimism that TEE has a strong record, enabling them to compete regionally. We keep our BUY rating on the stock and put our fair value estimate of S$0.31 under review, pending a management briefing. (Benjamin Lim) CSE Global: Profit warning for 4Q11 Summary: CSE Global warned that its 4Q2011's profit after tax will be around 75% of what is achieved during 3Q2011. This is in contrast to its earlier guidance (on Nov 2011 Results Announcement) which stated that 4Q2011 performance "will be better than 3Q2011 and 4Q2010". The group explained that several of its customers were late in providing approval to their engineering designs during the quarter, resulting in a lower-than-expected revenue and profit contribution from these contracts. We will seek further clarification from the management. In the meantime, we put our Buy estimate and $1.06 fair value estimate UNDER REVIEW. (Chia Jiunyang)

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

NEWS HEADLINES - Greece is prolonging bailout talks as its political leaders are unwilling to accept unpopular reforms failed to strike a deal over the €130b bailout. US and European stocks fell modestly, and the euro declined by 0.8% to US$1.3057. - The International Monetary Fund warns that if Europe's debt crisis worsens, China's economic expansion could be cut by as much as 4% from its current projection of 8.2% for this year. - Eu Yan Sang reported a net loss of S$2.78m for the quarter ended Dec 2011, versus a net profit of S$4.08m a year ago, chiefly due to a S$8.8m in impairment charges related to its investment in failed Australian retailer Healthzone - Memstar Technology, a manufacturer and supplier of PVDF hollow fibre membrane and related systems, achieved a net attributable profit of RMB18.0m for the second quarter ended Dec 2011, a 504% YoY increase. Revenue increased by 70.4% YoY to RMB43.4m. - GuocoLeisure has posted a net profit of US$12.7m for the second quarter ended Dec 2011, a 33.5% YoY decline. Revenue dropped 5.1% YoY to US$92.9m, mainly due to lower contributions from its UK gaming segment.

MARKET PULSE: Starhub, SIA & Valuetronics (3 Feb 2012)

Stock Name: StarHub
Company Name: STARHUB LTD

Research House: OCBC

Price Call: BUY

Target Price: 3.10

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 10.85

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.29

MARKET PULSE: Starhub, SIA & Valuetronics

3 Feb 2012

KEY IDEA StarHub Ltd: BUY with higher S$3.10 fair value StarHub Ltd reported better-than-expected 4Q11 results, with revenue coming in 7% and net profit 28% above our forecasts. For FY11, revenue and earnings were 2% and 7% higher than expected. It has also declared a quarterly $0.05/share dividend as guided. For 2012, management expects operating revenue to grow in the low single-digit range, while service EBITDA margin to be around 30%. It also expects to spend around 11% of operating revenue as capex; this also includes maintenance capex to meet the IDA's recently-announced stricter service requirements. And as before, it will maintain its S$0.20 per share dividend, or S$0.05 per quarter. We have modestly bumped up our FY12 earnings estimate by 4% to account for the margin improvement. And in line with its latest capex guidance, our DCF-based fair value improves from S$3.00 to S$3.10. While StarHub was the best performing telco stock in 2011, we continue to like its defensive earnings and attractive dividend yield. Maintain BUY. (Carey Wong) MORE REPORTS Singapore Airlines: Expensive fuel causing turbulent times Singapore Airlines (SIA) last night reported its 3QFY12 revenue grew 1% YoY to S$3.9b but PATMI fell 53% YoY to S$135m. Persistently high jet fuel prices caused SIA's fuel costs to jump 35% YoY to S$1.5b. All of SIA's business segments contributed lower operating profits from a year ago. The parent airline (Singapore Airlines) recorded an operating profit of S$137m, from S$378m a year ago. SIA Engineering's operating profit shrank 18% YoY to S$28m, while SilkAir's operating profit decreased 29% YoY to S$32m. SIA Cargo reported an operating loss of S$40m, swinging from an operating profit of S$48m in 3QFY11. Pending today's briefing with management, we put our fair value estimate of S$10.85/share and Hold rating on SIA UNDER REVIEW. (Eric Teo) Valuetronics Holdings: 3QFY12 earnings above expectations Valuetronics Holdings Limited (VHL) reported its 3QFY12 earnings which exceeded our expectations. Revenue of HK$617.2m represented a 17.7% YoY increase but a 1.6% QoQ decline. Net profit was flattish at HK$31.5m versus HK$31.6m in the preceding year but rose 9.5% QoQ. Excluding one-off items, we estimate that net profit for 3QFY12 would instead have declined 13.8% YoY and increased 24.1% QoQ, but still higher than our expectations. For 9MFY12, revenue increased 23.1% to HK$1.8b, meeting 76.6% of our full-year projections; while reported net profit declined 1.3% to HK$91.9m and formed 78.7% of our FY12 estimates. The group experienced strong revenue growth in its OEM and Licensing business during the quarter, but this was partially mitigated by a 15.7% YoY fall in revenue from its ODM segment. Moving forward, management remains cautious on the uncertain macroeconomic landscape and rising cost pressures. We will provide more details after a teleconference call with management. For now, we have a BUY rating and S$0.29 fair value estimate. (Wong Teck Ching Andy)

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

NEWS HEADLINES - The S&P 500 Index added 0.1% as a drop in jobless claims raised optimisms about the economy ahead of employment data to be released today. Oil fell to a six-week low as US supplies climbed and demand dropped. - Chinese Premier Wen Jiabao told German Chancellor Angela Merkel that China is considering contributing to the euro-area's bailout programmes through the IMF. - Eu Yan Sang International announced today that its wholly-owned subsidiary has entered into a conditional asset sale with Healthzone Ltd, which is under receivership, to expand and broaden its products penetration into the Australian markets. - Keppel Corporation announced that, with effect from 1 Feb 2012, it has increased the limit of its multi-currency medium term notes Programme from US$600m to US$1.2b. This is not expected to have any material impact on NTA or EPS for FY2012.