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Thursday, March 28, 2013

Local Brokerages Stock Call 28 March 2013

From OCBC:

Oil and Gas sector: Takeaways from IHS Petrodata’s seminar
We recently attended IHS Petrodata’s seminar on the offshore oil and gas sector, and came away feeling positive on prospects of selected sub-segments of the industry. For the deepwater drilling market, day rates have recovered to 2008 levels, especially the ultra-deepwater segment. Rates for harsh-environment rigs have also been climbing. 2013 is also expected to see the development of more global oil and gas field projects, while sentiment on the OSV market has generally improved. In particular, average earned day rates in Asia Pacific are showing signs of an upturn, especially for AHTS vessels smaller than 6,000BHP in Indonesia and Malaysia. Maintain Overweight on the broader oil and gas sector, with Ezion Holdings [BUY, FV: S$2.33], Keppel Corporation [BUY, FV: S$12.68], Sembcorp Marine [BUY, FV: S$5.84], and Nam Cheong [BUY, FV: S$0.30] as our preferred picks. (Low Pei Han, Chia Jiunyang)

Yoma Strategic Holdings: Moving into luxury tourism
Yoma Strategic Holdings (Yoma) reported that it would take a 70% stake in Chindwin Holdings which would acquire several connected tourism assets. First, Chindwin would acquire 75% of a balloon tour company “Balloons over Bagan (BOB)” for US$10.7m. BOB is the only hot air balloon operator in Myanmar and has had a profitable track record since it began operations 13 years ago. We understand that this acquisition price translates to a forward PE multiple of 6 to 8 times. In addition, Chindwin would acquire a 75% stake in 21.2 acres of land in Bagan for US$3.75m. This acquisition is conditional on the present owner converting the existing land-rights to allow for the construction and operation of a hotel business. Overall we see these acquisitions to be positive and allows Yoma to capitalize on the burgeoning demand for luxury tourism in Myanmar. While we believe the company holds meaningful franchise value as a leading developer in Myanmar, most positives are likely priced in at current prices. Maintain SELL with a 12-month fair value estimate of S$0.71 (20% premium to RNAV).  (Eli Lee)

Keppel Corporation: Good demand from Mexico; secures four more jack-ups
Keppel Corporation (KEP) announced that it has secured contracts to build four jackup rigs worth US$820m for Mexican drilling company, Grupo R. The rigs will be built to KEP’s proprietary KFELS B Class design and are scheduled for delivery progressively from 2Q15 to 4Q15. Recall that KEP also secured contracts to build two similar rigs for PEMEX in Dec last year for US$420m. As mentioned in our earlier notes, the strong demand coming from Mexico is within our expectations, as PEMEX plans annual capital expenditures of ~US$30b till 2019 to stem the country’s declining oil production. We see KEP as one of the beneficiaries of these developments. The group has secured new O&M orders worth about S$1.6b YTD, accounting for ~32% of our full year estimate. Maintain BUY with S$12.68 fair value estimate on KEP. (Low Pei Han)

Nam Cheong Ltd: US$72m contract for six vessels
Nam Cheong Ltd announced that it has sold six vessels worth a total of US$72m to two of its existing customers. Two 5,150 bhp Anchor Handling Towing Supply (AHTS) vessels are sold to Icon Offshore Berhad – one of Malaysia’s largest OSV group, while four Emergency Response and Rescue Vessels (ERRVs) will be sold to a Singapore-based company for deployment to the North Sea. The vessels are scheduled for delivery between 2Q13 and 4Q14. We currently have a BUY rating and S$0.30 fair value estimate for the counter. (Chia Jiunyang)

From CIMB:

Parkway Life REIT  
Defensive without losing sight of growth
NEUTRAL - Maintained | S$2.48 - Tgt. S$2.40
We recently brought Plife to see investors in Europe. Management articulated moves it undertook to strengthen its portfolio to ensure a sustainable DPU and further strategies to maintain DPU growth. We sense increased optimism about acquisitions this year. Factoring in higher retained earnings partially offset by higher acquisition accretion, we lower DPUs. Our DDM-based target price (discount rate: 6.7%) is, however, raised after rolling forward valuations. Maintain Neutral for premium valuations with catalysts from higher-than-expected accretion from acquisitions.  

From UOB KH:

Kreuz Holdings
Kreuz has recently inked a deal to build a game-changing deepwater
subsea vessel, which will lift the group’s capability to match that of leading
global subsea players. We expect the vessel to contribute a net profit of
US$6m-11m per year, lifting earnings by 13-23%. Maintain BUY with higher
target price of S$0.68 (previously S$0.53), given attractive 2014F PE of 4.5x
and a respectable 4-year EPS CAGR of 15% (2011-15).

Mapletree Industrial Trust
MIT is developing a S$108m (S$281psf) built-to-suit data centre for Nasdaqlisted
Equinix, with an option to upsize the investment to S$217m. Yield-oncost
is attractive at 7.5-8.0% when completed in 2H14, while income stability
is secure with a 20-year lease agreement. Maintain BUY with a higher target
price of S$1.66 (from S$1.62), factoring in a 1% dip in DPU in FY14-15
during construction and a 3% accretion in FY16.

GuocoLeisure - Portfolio Of Undervalued Assets In A
Global City (GLL SP/BUY/S$0.885/Target: S$1.19)
GLL’s sustained profitability and huge margin of safety from its
undervalued asset portfolio make it an attractive buy for value

From DBS:

Mapletree Industrial Trust has signed an agreement to develop
a ‘built-to-suit’ facility for Equinix Singapore, a 7 storey, high
specification property located in One-North. We like this deal
as (i) the long lease provides good income visibility for this
proposed investment, with annual step ups providing longer
term organic growth (ii) high returns of cost of 7.75% (on
estimated rent of S$2.0 psf pm) for this property, which will be
accretive to distributions and (iii) quality earnings backed by a
blue chip tenant - Equinix Singapore is a subsidiary of
NASDAQ-listed Equinix Inc. a global interconnection and data
centre company. Target price is adjusted slightly higher to
S$1.46 (Prev S$ 1.43) after this latest deal has been factored
in. Maintain HOLD call, as upside to TP is limited. 

Keppel Corp has secured contracts to build four jackup rigs
worth US$820m in total from Mexican drilling company,
Grupo R. The jackup rigs are scheduled for delivery
progressively from 2Q 2015 to 4Q 2015. We expect more
orders to come from the Mexican market as PEMEX, the
Mexican national oil company has announced investment
plans of US$25.3bn for 2013, of which US$20bn will be
targeted at upstream activities. It plans to add between eight
and 12 offshore platforms to its fleet. These latest contracts
bring Keppel's YTD order win to S$1,590m, making up 26.5%
of our full year assumption of S$6bn. Maintain BUY, TP:

Nam Cheong announced the first round of contract wins in
2013, securing US$72m worth of contracts for 2 AHTS and 4
ERRV (Emergency Response and Rescue) vessels. The two AHTS
vessels are part of Nam Cheong's build-to-stock series and we
estimate 15 of the 19 vessels scheduled to be completed in
FY13 have now been sold already. The order for the 4 ERRVs,
which will be built on a build-to-order basis, could add further
upside to our FY14 numbers. Orderbook now stands at about
RM1.3bn. This underpins robust earnings trajectory for the
Group in FY13/14. Maintain BUY with TP of S$0.30. 

From Maybank KE:

Noble Group : Leaner Is Better; Buy, TP $1.53
 NOBL SP | Mkt Cap USD6.3b | ADTV USD20.8m
    Ø   We  are  positive  on  Noble’s  new strategic direction to become a
    leaner  version  of  its former self. We believe some of its key drives
    over the next 12-24 months will bear immediate and tangible fruits.
    Ø   The  pricing  and  takeup  on Noble’s recent 5-year MTN issuance is
    evidence  that  the  company’s  healthier  balance  sheet and will have
    immediate positive impact on bottomline.
    Ø  Reiterate BUY with a Street-high TP of SGD1.53, pegged to 13x FY13F.
    Potential  catalysts  include  divestment gains and announcement of JVs
    with strong partners. 

Maintain BUY. We see company-specific reasons to be positive on
earnings outlook. Noble’s lower gearing should also find favor with
investors. We adjust FY13-FY15F earnings up by 1-2%, with TP of
SGD1.53 remaining pegged to 13x FY13F. Potential catalysts include
divestment gains and announcement of JVs with strong partners. 


Second Chance (BUY/TP: SGD0.53) recorded a 42.4% YoY
decline in 2QFY13 PATMI to SGD3.0m. This was despite a 9.6% growth in
revenue. The PATMI decline was largely due to higher operating expenses and
significantly lower property revaluation gains. Going forward, its apparel
business is expected to continue to do well, supported by its new stores in
Malaysia, but this is likely to be somewhat offset by lower rental income (it had
disposed a few investment properties in FY12) and possibly lower profits from
its gold business as gold prices remain softer. Management has guided that it
will distribute dividends of SGD0.034 / share for FY13. At the current price, this
would translate into an attractive yield of 8.2%. (Lynette Tan)

Nam Cheong: Closing 1QFY13 With Massive Win (BUY, S$0.26, TP:

TP lifted to SGD0.35, maintain BUY. Following the order win, we raise our
FY13-14F EPS by 1%-2%. Nam Cheong remains one of our top picks in the
small-cap oil & gas space, and our 10x P/E valuation is at a large 33% discount
to rig builders Keppel and SMM. Maintain BUY. 


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