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Monday, March 25, 2013

Local Brokerage stock call 25 March 2013

From OCBC:



- Second disappointment in two weeks

- Focus could now turn to China expansion
- Consensus PATMI estimates too bullish

Raffles Medical Group (RMG) announced last Friday that its resubmission for the change of use of its commercial podium at 30 Bideford Road to a medical centre had been unsuccessful. This is the second setback faced by RMG in as many weeks as it had only recently lost out on a land tender for the development of a private hospital in Hong Kong. Management could now possibly seek to sell the property, retain it for rental purposes, or keep it for partial use and partial rental. Meanwhile, we expect RMG to continue to grow its Singapore business and to step up its negotiation efforts with regards to its recent non-binding Letter of Intent for a proposed integrated international hospital development in Shenzhen, China. Maintain HOLD on RMG, with an unchanged fair value estimate of S$3.01.


- Sale of Singapore property at S$15.5m
- Transaction likely successful this time
- Potential distribution of disposal gains

Mapletree Logistics Trust (MLT) announced last Friday that it has entered into an option to purchase agreement for the divestment of 30 Woodlands Loop in Singapore at a sale price of S$15.5m. This represents a significant premium to its purchase price of S$10.3m in 2007 and its valuation price of S$11.0m in Mar 2012. The divestment is expected to be completed by May, and is expected to generate a net disposal gain of ~S$5.0m, which will be distributed to unitholders (subject to clarification on tax treatment). We re-jig our forecasts to take into account the divestment and the potential distribution of the net disposal gains in FY14. However, our fair value remains unchanged at S$1.25. We maintain our BUY rating on MLT
From UOB:
Ezion secured two new charter contracts and approvals for its marine supply
base in Australia in March. We raise our 2013-15 earnings forecasts by 6-
13%, but our target price remains at S$2.40 after factoring in a 5% EPS
dilution from a placement of 50m new shares. We expect Ezion to clinch
more charters following its recent breakthroughs in Indonesia, Malaysia,
Vietnam and India. Maintain BUY. 
Maintain BUY. No change to our target price of S$2.40, which is pegged
at 11x 2014F fully-diluted EPS (adjusted for dividends on perpetual
securities), which is 15% above the long-term 1-year forward PE mean of
9.6x for the offshore support vessel-owner segment of the offshore &
marine sector. While our net profit forecasts have been raised, EPS will
be diluted by the issue of new shares

Genting Hong Kong
While GENHK’s 2H12 earnings recovery was impressive, its near-term
valuations would be dampened by concerns of rising competition for its
50%-owned RWM in the intermediate term. While there will be potential
long-term upside driven by the cruise divisions, valuations are rich for now.
On the positive end, we have raised our earnings outlook. We maintain our
SELL call, but with a higher target price of US$0.39.

From DBS:
 OSIM – Growth not over yet; initiate coverage with a
BUY recommendation, target price S$2.25

We initiate coverage on OSIM with a BUY recommendation,
for 18% upside to S$2.25 TP. We believe OSIM is no longer
the entity it was before the write-off of Brookstone in FY08.
Quarterly results from 1Q09 to 4Q12 have shown that
earnings growth has been sustainable. OSIM is now a stronger
entity and better positioned for further growth. China and
product innovation are expected to drive the 16% earnings
growth CAGR from FY12-FY14F that we are forecasting. OSIM
is a beneficiary of the rising middle class population in China,
with 56% of revenues originating from North Asia. Rising
disposable income, a strong Rmb and increasing availability of
credit will encourage Chinese consumers to spend more. OSIM
now creates demand by innovating new products to target
new market segments.   

From Phillips:

Courts Asia Limited – Initiation
Recommendation: BUY
Previous close: S$0.98
Fair value: S$1.14

Investment Actions
Based on our DCF valuation, assuming WACC of 7.1%, and terminal growth of 2.5%, we derive a target price of S$1.14. This gives an implied P/E multiple of 15.6X, and P/B multiple of 2.1X. Based on the investment merits highlighted above, and current share price, we initiate coverage of Courts Asia with a BUY recommendation.  

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