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Sunday, March 24, 2013

Local Brokerage stock call 22 March 2013

From CIMB:

Armstrong Industrial
Recovery priced in
UNDERPERFORM - Downgrade | S$0.31 - Tgt. S$0.29
We believe Armstrong’s post-FY12 results share price outperformance has priced in all the positives from its automotive segment and cost saving measures. In addition, our channel checks reveal an unexciting outlook for the HDD industry in 1H13. Our estimates are unchanged as we have already factored in strong sales growth from the automotive segment and recovery in data storage in 2H13. Our target price stays at S$0.29, pegged at 8x CY14 P/E, its 5-year average. Following the strong share price gains recently, we downgrade our rating to an Underperform from a Neutral. De-rating catalysts could come from potential earnings disappointments.

From OCBC: 

Ezion Holdings: Secures service rig contract with good ROE
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 in a Middle Eastern yard. We estimate a good ROE of slightly more than 55% for this project, vs a forecasted ROE of 22% for Ezion in FY13. Ezion’s stock price has appreciated by about 18% YTD vs the STI’s 3% rise over the same period. However, we still see an upside potential of more than 15% over a one-year time frame. We tweak our earnings estimates, and based on 12x blended FY13/14F core earnings, our fair value estimate rises from S$2.33 to S$2.35. Maintain BUY. (Low Pei Han) 

KSH Holdings: Placement exercise to raise S$13.9m
KSH recently conducted a placement for 30.9m new shares and 4.1m existing treasury shares at 40.8 S-cents per share. This was at a 5.2% discount to the weighted average traded price of 43.0 S-cents on 11 Mar 2013 and raised S$13.9m of capital for the group. Shortly after the placement, KSH deployed S$1.9m to increase its stake in its Beijing condominium project (Liang Jing Ming Ju, Phase 4) from 26.24% to 45.00%. Pending further visibility on capital deployment, we are overall neutral on this placement but note it would increase the size of the public float and possibly improve the counter’s trading liquidity, which has been low historically. Maintain BUY on KSH. Our fair value estimate dips mildly to S$0.61 from S$0.62, due to a mild dilution effect, but our forecast for buoyant earnings growth over FY13-14 remains unchanged.  (Eli Lee)     

From UOB KH:
Silverlake Axis- Decoding The Positives; BUY Initiation
(SILV SP/Buy/ S$0.625/Target: S$0.91)
We initiate coverage on Silverlake Axis (SAL) with a BUY
recommendation and a street-high, DCF-based target price of
S$0.91, implying a 45.6% upside from the current price. 

From DBS:
Kreuz - Valuations still cheap; industry outlook robust.
Maintain BUY with higher TP of S$0.58
Kreuz’s earnings delivery has consistently exceeded our
expectations as they have continued to secure additional work
at higher margins from customers, based on their execution
track record. The robust industry outlook underpins order
book momentum and earnings growth trajectory. Kruez is
building asset base to propel future growth. It has won
US$155m worth of orders in FY12, and current orderbook
stands at US$205m, of which about 90% will be recognised in
FY13. Valuations are still cheap at 4.6x FY13 earnings;
maintain BUY with higher TP of S$0.58 (Prev S$ 0.43). 

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