UNDERPERFORM - Maintained | S$1.58 - Tgt. S$1.53
SMRT
surprised us with its profit warning. The group will slip into its
first-ever net loss in 4QFY3/13 as a result of high operating costs and
S$17m goodwill impairment for its associate Shenzhen ZONA. But it will
remain profitable for the full year. We slash our FY13-15 EPS by 4-22%
to reflect structurally higher opex and the one-off goodwill write-down.
Our target price (DCF, WACC 6.5%) falls to S$1.53. SMRT remains an
Underperform, with earnings and dividend disappointments being de-rating
catalysts.
From UOB KH:
SMRT Corporation
Shock Profit Warning Due to Impairment Loss and Wage Hike
SMRT announced that the group is expected to report a net loss for 4QFY13
due to a S$10m charge from the recently announced wage revisions,
together with a S$17m non-cash goodwill impairment for SMRT’s China
associate, Shenzhen ZONA Transportation Group. We slash our full-year
dividend forecast to 6.1 S cents, implying an uninspiring yield of 3.8%.
Maintain SELL with an unchanged target price of S$1.30.
From Maybank KE:
Ying Li International: Little Affected By Cooling Measures; Buy TP $0.61
YINGLI SP | Mkt Cap USD818.6m | ADTV USD3.7m
We believe that Ying Li will be less affected by the recent property
cooling measures. Reiterate BUY with target price of SGD0.61, pegged to
25% discount to RNAV.
The new CEO may open up new opportunities for Ying Li. It is
possible for Ying Li to explore other business models such as the
integrated township projects.
We are projecting strong EPS growth in the next three years on the
back of strong pipeline of assets. We like Ying Li’s prime asset
quality and its exposure to high-end commercial property sector in
Chongqing.
From RHB DMG:
SMRT Corporation
SMRT announced that it is expecting to report a net loss for
4QFY13 (financial year end Mar), due to deteriorating profitability with
increasing operating costs, coupled with a lack of corresponding fare
adjustments. SMRT will also report a SGD17m impairment of goodwill in its
associate Shenzhen ZONA Transportation Group, but will however still be
profitable for FY13. SMRT had in Jan 13 indicated that profitability for 4QFY13
and the next twelve months will deteriorate due to higher operating costs, in
particular for the fare-related businesses. In early Mar 13, SMRT had
announced a progressive revision of its non-executive wage scale, excluding its
Bus Captains which led us to downgrade our call on the counter to a SELL (from
NEUTRAL). We are maintaining our SELL recommendation though we are
looking to revise our FY13 estimates. Our current TP is S$1.43.
Keppel Corp: SGD1bn New Contract Within Expectations (NEUTRAL,
S$11.22, TP: S$11.21)
Keppel announced orders for four KFELS B Class jackup rigs from
Mexico-based drilling company, Grupo R, for USD820m (SGD1bn). YTD
order win of SGD1.59bn is still within our forecast of SGD5bn. We
maintain FY13-14F EPS estimates and TP is unchanged at SGD11.21.
Maintain Neutral on Keppel. Stock is now valued at 14.3x FY13F P/E.
From OCBC:
KSH Holding
ACQUIRING STAKE IN 160 CHANGI RD
- Buys 30% stake in 160 Changi Rd
- Expedient redeployment of capital
- Fair value raised to S$0.62
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 expediently 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.
Nam Cheong
US$72M CONTRACT FOR SIX VESSELS
- Two AHTS to Icon Offshore Berhad
- Four ERRVs for deployment in the North Sea
- Buoyant industry outlook
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.
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From Phillips:
Overseas Union Enterprise Ltd – Update
Recommendation: Accumulate
Previous close: S$3.07
Fair value: S$3.24
Revival of hospitality REIT plan a positive note
Move could strategically unlock asset value while remaining as a substantial shareholder and asset manager
Net proceeds give rise to potential of special dividend payout
Maintain Accumulate with higher fair value of $3.24.
SMRT Corporation – Update
Recommendation: Sell
Previous close: S$1.58
Fair value: S$1.20
Profit warning of a loss for 4QFY13E
Impairment charge on goodwill of S$17mn.
Other cost items could also be higher than usual.
Maintain Sell with a lower target price of S$1.20.
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