SG: MARKET PULSE: Long SPH/Short STH, CMT, Yoma, STE (5 Apr 2013)

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.32

MARKET PULSE: Long SPH/Short STH, CMT, Yoma, STE

5 Apr 2013

KEY IDEA Conviction Idea: Pair trade - Long SPH / Short STH We recommend a long SPH/short STH pair trade. Investors would pick up a 63 bps dividend yield spread (to offset transactions costs) and gain significant upside exposure to the scenario that SPH lists its REIT. Two bases for our trade: first, we believe SPH's 63 bps spread over STH is attractive. Newspapers are generally perceived to have weaker prospects than telcos but SPH has a virtual monopoly in its market while STH perennially competes against the much larger SingTel and has been losing market share in both its mobile and Pay TV segments. Second, from our calculations, we believe a SPH REIT listing scenario is realistic given the current yield/valuation dynamics of its assets and the size of its portfolio. Assuming SPH retains a 51% stake in the REIT, we see potential divestment gains of S$625m to S$744m or 39 to 46 S-cents per share. This could consequently lead to a special dividend and/or distribution in specie of REIT units for SPH shareholders. (Eli Lee) MORE REPORTS CapitaMall Trust: Deep value at current price CapitaMall Trust (CMT) has been a clear laggard within the S-REITs space, staying flat YTD versus an average of 11.0% increase in unit prices for its local retail peers. We believe this is unjustified given its portfolio of 15 quality retail malls and its relentless efforts in optimizing its yield via asset enhancement initiatives. The operating landscape in the retail space also appears sanguine thus far. According to CBRE, the average rents in prime Orchard Road rose for the first time in 1Q13 after staying flat since 3Q11. While the suburban retail will see a substantial amount of space coming online in 2013, CBRE notes that retailers are still upbeat about the suburban market. This is consistent with our view that both the Orchard Road and suburban rents may possibly remain firm in 2013. We are keeping our S$2.32 fair value unchanged and maintaining BUY on CMT as we expect the valuation gap to narrow between CMT and its peers. (Kevin Tan) Yoma Strategic Holdings: Forming consortium to bid for mobile license Yoma announced that it has formed a consortium with FMI, its affiliate in Myanmar, and Digicel Group and Quantum Strategic Partners to bid for one of the two mobile licenses expected to be awarded by the Myanmar Government later this year. The consortium has submitted its pre-qualification bid in Nay Pyi Taw yesterday as the first part of the mobile license process. We understand that Yoma and FMI has joined the consortium through a newly created 80:20 joint venture YSH Finance Ltd, but Yoma's eventual effective stake in the consortium is yet unclear. Also, we expect fierce competition for the mobile licenses from a host of contenders, including a Vodafone-China Mobile tie-up and other major telco players such as SingTel, Telekomunikasi Indonesia, Malaysia's Axiata Group Bhd, Norway's Telenor ASA and India's Bharti Airtel Ltd. Since we have downgraded Yoma to a SELL on 1 Feb 2013 with a fair value estimate of S$0.71, the share price has corrected 17.2% from S$0.90 to S$0.745. We now put our rating and fair value estimate UNDER REVIEW. (Eli Lee) ST Engineering: ST Electronics won S$151m of contracts in 1Q13 ST Engineering (STE) announced that its electronics arm, ST Electronics, has secured about S$151m of contracts. This is in line with our expectations. The contracts include S$65m in the rail electronics market with projects for mass rapid transit (MRT) projects in Malaysia, Taiwan and North America. S$78m in contracts was secured under the satcom and sensor business segment and S$8m was under smart utilities solutions. We maintain our fair value estimate of S$4.12 and HOLDrating on STE. (Sarah Ong)

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

NEWS HEADLINES - US stocks climbed Thursday as optimism over monetary stimulus in Japan outweighed news that US jobless claims rose to a four-month high. - Amara Holdings has entered into a MOU to develop hotels and engage in other real estate projects in Myanmar. The first project involves establishing a JV to develop and operate a hotel located in Dagon Township, Yangon. The proposed total investment is ~US$50m. - Metro Holdings has entered into an option to sell a property at 100H Pasir Panjang Rd for a purchase price of S$39.8m. - Riverstone Holdings has acquired a piece of land of 30 acres located at an industrial estate in Taiping, Malaysia for a purchase price of RM12.4m, to support business expansion.

SG: MARKET PULSE: First REIT, GAR, Lian Beng, Yoma (4 Apr 2013)

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

Research House: OCBC

Price Call: HOLD

Target Price: 1.31

Stock Name: GoldenAgr
Company Name: GOLDEN AGRI-RESOURCES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.63

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: SELL

Target Price: 0.71

MARKET PULSE: First REIT, GAR, Lian Beng, Yoma

4 Apr 2013

KEY IDEA First REIT: Enhancing its portfolio value First REIT (FREIT) recently announced its proposal to acquire two Indonesian hospitals from its sponsor Lippo Karawaci (Lippo) for a total purchase consideration of S$190.4m. This would be funded largely by debt and the issuance of new units to a smaller extent to Lippo. We are positive on the acquisitions as it offers DPU accretion of 6-13% for FY13-14F, according to our estimates, while also providing stability and visibility to unitholders. We now adopt a DDM model (cost of equity: 7.7%; terminal growth rate: 1.0%) as our new valuation matrix (previously RNAV). Coupled with our higher DPU forecasts, we bump up our fair value estimate from S$1.00 to S$1.31. But we maintain our HOLD rating as we believe that the market has largely priced in the positives from these acquisitions and FREIT's continued transition to a sizeable healthcare REIT in the region. (Wong Teck Ching Andy) MORE REPORTS Golden Agri-Resources Ltd: Near-term outlook remains weak Golden Agri-Resources (GAR), after reporting a disappointing set of FY12 results at end Feb, has languished below S$0.60 in recent weeks; and may continue to do so in lieu of the still-weak near-term outlook. The main reason for the expected near-term underperformance comes from the uninspiring CPO (crude price oil) prices, which has again fallen below MYR2,400/ton. The other reason is probably the still-high stockpiles seen at several planters in both Malaysia and Indonesia. Despite the near-term headwinds, management remains relatively upbeat about its prospects, as it still sees robust demand growth for CPO as an edible oil from emerging and development countries. For now, we intend to maintain our HOLDrating and S$0.63 fair value (based on 12.5x FY13F EPS); and we see value emerging at S$0.55 or better. (Carey Wong) Lian Beng Group - Awarded two contracts worth $201m Lian Beng announced that it has secured two construction projects which would boost its order book to a record S$1.085b. The first contract is worth S$112m and is awarded by Oxley Holdings to design and construct a multiple-user light industrial development at Sunview Road, Jalan Buroh and Pioneer Rd. It will commence in Apr-13 and take 24 months to complete. The second contract, also awarded by Oxley Holdings, is worth S$89m and involves the design and construction of a three-storey and seven-storey building forming a multiple-user industrial development at Tampines Industrial Crescent, Tampines Ave 10 and Tampines Expressway. It will also commence in Apr-13 and take 24 months for completion. We are keeping our rating on Lian Beng UNDER REVIEW pending a change in analyst. (Research Team) Yoma Strategic Holdings: JV with Dragages Singapore Yoma announced that its wholly-owned subsidiary SPA Project Management Pte. Ltd. has formed a JV with Dragages Singapore Pte Ltd to construct 1,043 apartment units at Thanlyin Star City in Myanmar. The development would cost ~US$94m and construction would commence in Apr-13 and last for 33 months. The JV would be 60% owned by Dragages Singapore and the remaining by SPA Project Management Pte Ltd. While we are positive on the company entering into a JV with an established name in the sector and giving added visibility on the construction timeline for Star City, there is limited impact on our RNAV estimate at this juncture. Maintain a SELL based on a 12-month fair value estimate of S$0.71 (20% premium to RNAV). (Eli Lee)

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

NEWS HEADLINES - US stocks fell on Wednesday, with the benchmark indexes dropping the most in over five weeks, following disappointing labour market data. - Macquarie International Infrastructure Fund is considering the divestment of its 47.5% interest in Taiwan Broadband Communications to the trustee-manager of Asian Pay Television Trust, which will be a business trust that may IPO on the SGX-ST. - Logistics Holdings has secured two contracts amounting to S$50.9m from the HDB for the upgrading of four HDB precincts. - ISDN Holdings has entered into an agreement for the placement of up to 23.73m new ordinary shares, which could raise gross proceeds of up to S$10.7m. - Sunlight Group has entered into an agreement for the placement of up to 130m new ordinary shares to raise gross proceeds of up to S$4.94m.

SG: MARKET PULSE: Sembcorp Marine, FCT, KSH, TEE (3 Apr 2013)

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.64

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.32

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.62

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.30

MARKET PULSE: Sembcorp Marine, FCT, KSH, TEE

3 Apr 2013

KEY IDEA Sembcorp Marine: More prudent on margins Sembcorp Marine (SMM) is currently building a 82.5ha yard in Brazil to undertake drillship construction, amongst others. Should inflation in Brazil continue to be unrelenting, SMM may face further margin pressures from labour costs, especially since there is already a shortage of skilled labour in the country. Over the longer term, however, we believe that SMM's foray into the drillship business puts it in good stead to secure more drillship orders, diversifying its product range. In the shorter term, however, we prefer to be more prudent on the group's operating margin assumptions, and lower these to 12.1% and 12.3% for FY13F and FY14, respectively (2012: 12.5%). As such, our SOTP-based fair value estimate slips from S$5.84 to S$5.64. Maintain BUY. (Low Pei Han) MORE REPORTS Frasers Centrepoint Trust: Downgrade to HOLD - fair value hit Frasers Centrepoint Trust (FCT) has enjoyed a good run-up in its unit price, clocking a 7.0% return YTD and 40.8% return YoY. This compares significantly to the 5.7% YTD and 31.4% YoY increase seen by the FTSE ST REIT Index. Now trading near its historical high and our fair value, FCT is the most expensive (P/B of 1.40x) when compared to its local retail peers (1.18x) and the S-REITs sector average (1.17x). As such, we believe that most of the good news has been priced in. While the asset injection of Changi City Point into FCT's portfolio may possibly be a catalyst to its unit price and DPU growth, the timeline is uncertain as the regulatory procedures for the strata division into its retail, business park and hospitality components is a lengthy process. In view of the limited upside potential in the near term, we now downgrade FCT from Buy to HOLDon valuation grounds. We recommend switching FCT to CapitaMall Trust [BUY, S$2.32 FV] as a cheaper alternative to blue-chip local retail play with exposure to equally resilient suburban portfolio assets. (Kevin Tan) KSH Holdings: Awarded S$60m JTC construction contract KSH announced yesterday that it was awarded a S$60m construction contract by Jurong Town Corporation ("JTC") for a district cooling system plant at Ayer Rajah Ave. We understand management wanted to diversify their condominium-heavy construction book with a public project, and gross margins continue to exceed a 10% hurdle rate. In 2013 to date, order book replenishment now cumulates to S$202m - tracking somewhat above forecast and exceeding the S$161m total last year. The order book now stands at S$489m. Given its momentum, we are reviewing our valuation of KSH's construction segment - currently pegged at 4 times FY13E earnings versus 5-7 times seen at peers. We also see upcoming launches at key property projects (Hong Leong Gardens, Seletar Gardens and King Albert Park) to be potential catalysts ahead. We will speak further with management later today and, in the meantime, reiterate BUY while our fair value of S$0.62 is under review. (Eli Lee) TEE International: Joint bid for Myanmar airport project TEE International, Yongnam Holdings and Samwoh Corp have joined forces to participate in a consortium with JGC Corp and a unit of Changi Airport International to tender for the construction and operation of Myanmar's new international airport. TEE and Samwoh will each take a 25% stake in a special purpose vehicle (SPV) that will in turn supply up to 60% of the project consortium's equity. Yongnam will own 50% of the SPV and represent it in all negotiations involving the project. We are neutral on the announcement, pending further updates, and we maintain our fair value estimate of S$0.30 and HOLD rating for TEE. (Conrad Tan)

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

NEWS HEADLINES - The Dow and S&P 500 reached record closing highs, as health insurers gained on Medicare-reimbursement news and US factory orders climbed in Feb. - WE Holdings proposes a rights cum warrants issue, which could raise S$10.10m under maximum subscription, to strengthen its balance sheet and fund expansion into resources businesses in Myanmar. - Kreuz Holdings has secured a subsea installation contract worth ~US$25.0m from a third-party client. Estimated completion is by the fourth quarter of this year. - Boustead Singapore has divested its entire shareholding in OM Holdings Limited, an ASX-listed manganese mining company, for a total sales consideration of AU$18.5m. - Radiance Investment Pte. Ltd has agreed to subscribe for an aggregate of 51m new ordinary shares in the capital of Pacific Healthcare Holdings Ltd at the price of S$0.0828 per share. - ISDN Holdings has entered into a non-legally binding MOU with Tun Thwin Mining Co., Ltd to explore joint partnerships in energy opportunities in Myanmar.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 1.47

Stock Name: SMRT
Company Name: SMRT CORPORATION LTD

Research House: UOB KayHian

Price Call: SELL

Target Price: 1.30

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: UOB KayHian

Price Call: HOLD

Target Price: 11.21

Market Compass

02 April 2013~ Good Morning Singapore!

Singapore Idea Snippets:

02 April 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : Education is the most powerful weapon which you can use to change the world. - NELSON MANDELA Singapore: The Day Ahead SINGAPORE DAYBOOK: SPH to pay up to $60m for sgCarMart. CEO says acquisition will add to the breadth of SPH's online classifieds portfolio. [SINGAPORE] Singapore Press Holdings (SPH) yesterday agreed to pay up to $60 million in cash for popular online car portal, sgCarMart (SGCM). The deal includes SGCM's online vehicle classifieds site, car auction platform, online marketing site as well as a service provider for car loans, insurance and settlement services. SPH's announcement yesterday said that it had agreed to buy all of the issued shares of SGCM Pte Ltd from its current owners, and to purchase certain trademarks and other intellectual property rights from SGCM and its subsidiary, Quotz Pte Ltd. It added that the maximum purchase price of $60 million was arrived at "following arm's length negotiations on a willing-buyer, willing-seller basis and taking into account, inter alia, various factors such as the existing assets, intellectual property rights, goodwill, financial position and business prospects of SGCM". MARKET SCOOP CapitaLand restructures Surbana Corp S'pore, Malaysia and Thailand set common standards for securities offering CAO starts operation of joint-venture oil terminal in S Korea Demonstrations hit HPH Trust's HK port No bid for STX Corp's shares in STX Pan Ocean Koyo adjusts FY12 results for Poh Lian receivables HDB resale price index up 1.2% q/q in Q1 Private property prices rose less in Q12013: URA CIMB Securities says... NOBLE GROUP | OUTPERFORM | TP: S$1.47 Slower economic activity, heightened risk aversion and earnings disappointments have pinned Noble's share price near to all-time lows The IMF now projects an acceleration of global growth in 2013-2014, suggesting that Noble's fortunes could be turning The stock screens well not just relative to its historical trading band but also against its peers, from both P/E and P/BV perspectives Higher economic activity and consumption will spur demand for raw materials, leading to improved earnings Against a backdrop of low expectations and low ownership, any positives from earnings surprises and a return of risk appetites could spark Noble's rerating FY13 will be a year of earnings recovery, driven by sustained profits from energy and metals, coupled with normalisation of agriculture profits, which tumbled to a record low in 2012 We maintain our Outperform rating, EPS estimates and target price (10.1x CY14 P/E, 0.5SD below the 5-year mean) UOB KAY HIAN says... SMRT CORPORATION | SELL | TP: S$1.30 SMRT has announced that the group is expected to report a net loss for 4QFY13 This is in line with deteriorating profitability due to: a) increasing operating costs coupled with a lack of fare increments, and b) a S$17m non-cash goodwill impairment for SMRT's associate, Shenzhen ZONA Transportation Group Co. Ltd In our view, SMRT is likely to cut full-year dividends from 8.5 S cents and 7.45 S cents in FY11 and FY12 respectively to an expected 6.1 S cents for FY13, on the back of heavy capex commitments and increasing gearing We expect staff headcount and repair and maintenance costs to continue escalating on the back of higher service, reliability and operational performance standards We have slashed our FY13 and FY14 profit forecasts by 25% (11% excluding one-off impairment loss) and 5% respectively, due to the S$17m goodwill impairment and higher-than expected wage cost increases Maintain SELL with a DCF-derived target price of S$1.30 (no change), assuming 7.1% cost of equity and 1.5% terminal growth DMG OSK Securities says... KEPPEL CORPORATION | NEUTRAL | TP: S$11.21 Keppel announced orders for four KFELS B Class jackup rigs from Mexico-based drilling company, Grupo R, for USD820m (SGD1bn) The four KFELS B Class design rigs will delivered between 2Q2015 and 4Q2015 We reiterate our view that Singapore yards may find it hard to raise prices to expand margins due to the rush of the Chinese yards into the jackup market with near guaranteed take-out financing The orders lifted its YTD order book to SGD1.59bn, 32% of our full-year forecast of SGD5bn In our view, jackup rigs will be the key order driver this year as the fleet renewal cycle is still intact and few orders were placed last year We are neutral on the stock: i) unexciting EPS growth as margins return to normal levels; ii) property earnings will see significant decrease due to absence of lumpy earnings in FY13; iii) valuation is fair at 14.3x FY13F P/E given slowdown in earnings

SG: MARKET PULSE: SMRT, United Environtech, SPH (2 Apr 2013)

Stock Name: SMRT
Company Name: SMRT CORPORATION LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.51

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.90

MARKET PULSE: SMRT, United Environtech, SPH

2 Apr 2013

KEY IDEA SMRT Corporation: More impairments? We view the recent goodwill impairment announcement as a way for SMRT's new management to turn the page on its past overseas ventures although the timing did take us by surprise. While the Shenzhen ZONA venture failed to yield the desired results, its performance only turned negative over the past two quarters. Nonetheless, we feel that management review of existing operations is still ongoing, and we could see further impairments - particularly on the SG bus business - down the line. In the interim, we expect to see a net loss in excess of S$4.3m for 4QCY13, and a possible halving of FY12's final dividend. As we roll our valuations forward to include FY15, our fair value declines to S$1.51 from S$1.62 previously with higher operating expenses and a lack of growth opportunities to blame. We maintain HOLD on SMRT and reiterate our view that an inflection point is unlikely anytime soon. (Lim Siyi) MORE REPORTS United Envirotech: Inks another project in Jiangsu United Envirotech Ltd (UEL) has recently inked an agreement worth RMB200m (S$40m) with the local government of Siyang County, Jiangsu Province, China for TOT (Transfer-Operate-Transfer) and BOT (Built-Operate-Transfer) projects in an industrial park for the textile industry. Management intends to finance its latest investment using proceeds from the previous convertible bond issue to KRR and bank financing. Based on its usual 40% equity/60% debt financing model, UEL would need around S$5.6m for Phase 1 of the TOT project, which should not be an issue as it is currently sitting on ~S$63.2m of cash (as at 31 Dec 2012). In light of the latest investment, we bump up our FY14 estimates for revenue by 1.5% and earnings by 4.9%; this in turn raises our fair value from S$0.88 to S$0.90, still based on 13x FY14F EPS. Maintain BUY. (Carey Wong) Singapore Press Holdings: Acquires vehicle online classifieds site SPH announced that it has entered into a sale and purchase agreement to purchase SGCM Pte. Ltd. which owns and operates vehicle online classified sites (including the popular sgcarmart.com), a car auction platform, and performs online marketing. In addition, it is also a service provider for car loans, insurance and settlement services. The maximum aggregate consideration payable is S$60m and would be made in cash. We see this acqusition to be a logical one and part of SPH's continued expansion into online media advertising. We would speak further with management regarding this acquisition and, in the meantime, maintain BUY with an unchanged fair value estimate of S$4.94. (Eli Lee)

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

NEWS HEADLINES - Latest official flash estimates show a slower QoQ increase in private home prices in 1Q13 than in 4Q12. Meanwhile, HDB resale flat prices grew at the slowest pace (1.2% QoQ) in a year in 1Q13. - Beijing, Shanghai and another major city in China's south-west will implement strict property cooling measures, such as the prohibition of single Beijing residents from buying second homes. - China's official PMI came in at 50.9 last month, an 11-month high, compared to 50.1 in Feb. However, it still missed analysts' estimates. - SPH will pay up to S$60m in cash for popular online car portal, sgCarMart. - HPH Trust's shares slipped yesterday as its Hong Kong unit saw a fifth day of demonstrations by port workers demanding a pay rise from stevedoring contractors. - Chip Eng Seng has bought a 2,927 sq m site at the fringe of the CBD of Melbourne, Australia, for A$32m.

SG: MARKET PULSE: KSH Holdings, Nam Cheong Ltd (1 Apr 2013)

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.62

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.30

MARKET PULSE: KSH Holdings, Nam Cheong Ltd

1 Apr 2013

KEY IDEA KSH Holdings: Acquiring stake in 160 Changi Road redevelopment Summary: KSH would acquire a 30% stake in 160 Changi Rd, located at the corner of Changi Rd and Lorong 105 Changi, for S$20.4m. Assuming a 50:50 retail and office breakdown and selling prices of S$2.8k and S$1.8k for retail and office, respectively, we estimate a 1.5 S-cents accretion to KSH's RNAV. We like that KSH has re-deployed capital expendiently into new projects after raising S$13.9m in mid-Mar 2013, and believe this points to a well thought-out plan for capital management and growth. Maintain BUY with an increased fair value estimate of S$0.62 versus S$0.61 previously. Our SOTP methodology conservatively values KSH's construction segment at 4x FY13E earnings and its property segment at a 40% RNAV discount. This being so, its fair value estimate could re-rate signficantly if construction order book replenishment continues unabated and/or upcoming launches perform well. (Eli Lee) MORE REPORTS Nam Cheong Ltd: US$72m contract for six vessels Summary: Nam Cheong Ltd announced that it has sold six vessels worth a total of US$72.1m to two of its existing customers. Two 5,150 bhps Anchor Handing Towing Supply (AHTS) vessels were sold to Icon Offshore Berhad, one of Malaysia's largest OSV group, while four Emergency Response and Rescue Vessels (ERRVs) were sold to a Singapore-based company that provides ship management and chartering services. The six vessels will be built in one of its sub-contracted yards in China with expected deliveries between 2Q13 and 4Q14. We continue to like Nam Cheong for its exposure to the buoyant offshore market in Malaysia and its close ties with Petronas-licensed companies. Its build-to-stock shipbuilding programme enables it to capture the strong domestic vessel demand, while its build-to-order business model helps lower its overall risk profile. Maintain BUY with unchanged fair value estimate of S$0.30. (Chia Jiunyang)

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

NEWS HEADLINES - US equities ended 1Q on a positive note with both the S&P 500 and the Dow at new highs. - Keppel REIT has completed the acquisition of a 50% interest in Mirvac (Old Treasury) Trust, which has entered into a development agreement with the State of Western Australia to deliver a new office tower to be built in Perth. - Banyan Tree Holdings has acquired the remaining 6.57% interest in its subsidiary, Maldives Bay Pvt Ltd for a consideration of US$2.6m, funded by internal resources. - Loyz Energy completed the divestment of its sanitary ware operations on 31 Mar for S$9m. - Armarda's associate CMSCG and China Telecom Satellite jointly begin marketing activities mobile satellite handsets and mobile satellite airtime services for 20 key Chinese distributors. - China Great Land Holdings' subsidiary has entered into a binding MOU for a proposed joint venture with Sanya Wan Jia, a Chinese property developer.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.38

Stock Name: OKP
Company Name: OKP HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.48

Stock Name: GuocoLeisure
Company Name: GUOCOLEISURE LIMITED

Research House: OSK

Price Call: BUY

Target Price: 1.25

Market Compass

28 March 2013~ Good Morning Singapore!

Singapore Idea Snippets:

Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : If you just set out to be liked, you would be prepared to compromise on anything at any time, and you would achieve nothing. - MARGARET THATCHER Singapore: The Day Ahead SINGAPORE DAYBOOK: PRs pull back sharply on private home buys. Their share of February purchases plunges in the wake of the latest cooling measures. [SINGAPORE] The Jan 12 cooling measures appear to have spooked Singapore permanent residents (PRs) looking to buy private homes here. Their share of private home purchases dived in February after the measures introduced additional buyer's stamp duty (ABSD) on a PR's first residential property purchase here. The ABSD rate on subsequent purchases by PRs was also raised significantly. However, most analysts expect the PR buying share to recover, at least among PRs acquiring their first property. An analysis of URA Realis caveats data by Knight Frank shows that in February, PRs accounted for just 12.7 per cent of the 789 caveats lodged for the purchase of private homes excluding executive condominiums in that month. This marked a 5.7 percentage-point drop from the 18.4 per cent share held by PRs of the total 2,876 caveats in January. MARKET SCOOP Keppel to build four more jackup rigs for US$820m Second Chance hit by fair-value fall Nam Cheong gets US$72.1m in deals Office occupancy up 0.4% to 95.4% in Q1 '13: DTZ Singapore expects slower rise in visitors this year First Reit to buy two Indonesia hospitals RH Energy firms up RTO plan OCBC Securities says... NEPTUNE ORIENT LINES | BUY | TP: S$1.38 Despite the constant reminders of lingering economic uncertainty, the Shanghai Containerised Freight Index has stayed within a tight band (1,073-1,246) since the start of CY2013 Although container ship capacity is estimated to increase by at least 10% this year, several liners are quietly confident of a better CY2013 showing in terms of rates While we view the optimism over CY2013's prospects positively, there is still the likelihood of supply outstripping demand, especially on certain routes such as the transpacific trade lane We are encouraged by these developments and maintain our view that NOL will have a turnaround year in FY13 Nonetheless, we adjust our estimates downwards as we feel the transpacific route, which is NOL's main revenue contributor, to be especially susceptible to rate fluctuations OCBC says... OKP HOLDINGS | HOLD | TP: S$0.48 To recap, 4Q12/FY12 results were generally in line with our expectations While FY12 net income of S$104.5m (-5% YoY) was 5% lower than our estimate, PATMI of S$12.4m (-53% YoY) was 6% higher than what we expected OKP's extensive experience in public-sector construction and maintenance projects and its reputation for on-time delivery has secured it an order book of around S$377m (as of Feb), which stretches till 3Q 2015 However, we expect that, going forward, OKP gross profit margin will shrink below the 22% it registered for FY12, due to increasing manpower costs and growing competition Management indicated that it has found an established foreign partner with which it can jointly compete for work on the new MRT lines Applying a P/E multiple of 11x to FY13F EPS, we derive a FV of $0.48/share DMG OSK Securities says... GUOCO LEISURE | BUY | TP: S$1.25 GuocoLeisure (GLL), the listed leisure and hospitality arm of the Guoco Group, is an undervalued gem sitting on a portfolio of cash-generative, hard-to-replace assets GLL's crown jewel is its Guoman/Thistle hotel chain, the leading hotel operator in London An upcoming valuation exercise for GLL's hotels, currently underway, as a result of a privatization offer for its parent Guoco Group by major shareholder Quek Leng Chan, should shed more light on the market value of its hotels and the embedded surplus of the related real estate value GLL owns a 55% stake in the Weeks Royalty, which entitled it to a 2.5% royalty granted by BHP/EssoMobil on the gross value of all hydrocarbons produced and recovered in designated areas within the Bass Straits of Australia Trading at massive 53% discount to our SOTP valuation In our view, GLL offers a compelling asset play with imminent catalysts from restructuring within the group and greater transparency on its hotel assets