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Thursday, March 21, 2013

Local Brokerage stock call 21 March 2013

From OCBC:

Hospitality REITs: Challenging industry environment
We understand that players in the local serviced residence industry believe that demand for 2013 will remain flat, with average daily rates staying flat or declining. This corroborates our view that 1H13 is challenging for the Singapore hospitality industry. In the near term, acquisitions may be positive price catalysts. CDLHT completed the acquisition of Angsana Velavaru (Maldives) on 31 Jan and now the attention is on FEHT, which may buy the 298-room Rendezvous Hotel from Straits Trading around end 2Q13. We remain NEUTRAL on hospitality REITs. We have HOLDs on Ascott Residence Trust [FV: S$1.36], CDL Hospitality Trusts [FV: S$2.11] and Far East Hospitality Trust [FV: S$1.05]. (Sarah Ong)

OSIM International: Expect continued resiliency
We expect OSIM International’s (OSIM) business to remain resilient despite concerns resurfacing over China’s economic growth. This would be driven by continued efforts by management to enhance its product appeal through innovative new products such as the recently launched uAngel Sofa-Tranzformer and productivity gains to boost its margins. Although similar concerns over China’s economy also transpired last year, OSIM still managed to deliver positive YoY growth in its topline and bottomline for all four quarters of 2012. We maintain our BUYrating on OSIM with an unchanged fair value estimate of S$2.19, still pegged to 16.4x FY13F EPS. The stock is trading at 14.2x FY13 and 12.8x FY14 EPS, while offering FY13F dividend yield of 3.2% and ROE of 42.8%. (Wong Teck Ching Andy)

Ezion Holdings: Secures another service rig contract
Ezion Holdings (Ezion) announced that it has secured a charter contract worth about US$48.2m over a three-year period to provide a service rig for an international oil and gas major for work in the Arabian Gulf. The unit will be deployed before end 2013 after refurbishment and upgrading, and will be funded by debt and internal resources. Pending details from management, we maintain our BUY rating but put our fair value estimate of S$2.33 under review. (Low Pei Han)

From UOB KH:

Venture Corporation- Short-term negative; medium-term
positive. (VMS SP/BUY/S$8.67/Target: S$9.10)
Maintain BUY. Venture provides attractive and sustainable
dividend yield due to its high-value high-mix business model,
consistently positive free cash flow and cash-rich balance sheet

OSIM International (OSIM SP, O23) –
Technical BUY with +16.1% potential return

Sound Global (EPUR SP, E6E) –
Technical BUY with +18% potential return

Olam International (OLAM SP, O32) –
Technical SELL with +8.5% potential return

From Maybank KE:

SPH Thinking outside the box. BUY. We maintain BUY on SPH, with a raised target price of SGD4.95 based on SOTP. Dividend yield still looks attractive at 5.7% even after recent share price surge. We believe we are the first broker to highlight the possibility of potential partners that would address concerns that, as sponsor, it does not have a long enough tail of injectable assets, and extend SPH’s attraction as a property play to augment its waning media business.

From DBS:

Ezion Holdings, Buy S$1.97, Bloomberg: EZI SP Further boost to earnings Price Target : 12-Month S$ 2.42 (Prev S$ 2.38)
Maintain BUY, TP adjusted up to S$2.42. In line with higher FY14F EPS, our TP is consequently revised up to S$2.42 (prev. S$2.38), still pegged to 12x blended FY13/14 PE. With a fortified balance sheet - following the recent issue of new shares and the divestment of its stake in the OMSA JV - and a robust pipeline of potential projects, we believe Ezion will continue to grow its project backlog and earnings stream. Maintain BUY for its high earnings visibility and undemanding valuations of 13x/ 8x FY13/14 PE against a solid FY12-14F estimated EPS CAGR of 67%.

Sound Global Limited, Buy S$0.50, Bloomberg: SGL SP Attractive M&A target Price Target : 12-Month S$ 0.81 (Prev S$ 0.89)
•       Visibility backed by record EPC backlog and growing base of recurring
O&M revenue
•       FY13/14F earnings adjusted by -5%/+12% respectively
•       Surging interest expense and delayed execution are key risks;
privatization/M&A could be a catalyst
•       TP lowered to S$0.81, but there is still 62% potential upside;
valuation stands at >40% disc to regional peers, Maintain BUY

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