Local Brokerages Stock Call 10 April 2013

From OCBC:
Hyflux: China back on radar screen  
Summary: Hyflux recently announced that its subsidiary – Hyflux Investment Consultancy and Management Service (Tianjin) Co – has signed two memoranda of understanding (MOUs) with the prefectural governments of Chuxiong and Qujing in Yunnan province to develop water and environmental projects in these two cities. Management estimates the project in Chuxiong to be less than RMB2b and Qujing to be ~RMB1.2b. While it is still early days yet, we view the MOUs as a positive development as it suggests that China is back on the radar screen. For now, we will maintain our HOLD rating and S$1.44 fair value on the stock; but we do see room for re-rating should these MOUs translate into actual contracts. 

ComfortDelGro: Now joint-second in London
ComfortDelGro’s acquisition of a portion of FirstGroup plc’s London bus business for approximately S$109m will increase its London bus fleet significantly by 494 to 1,700, and bring its market position to joint-second alongside Arriva London with a market share of around 19% (previously 12%). In addition, its UK bus revenue and operating profit should increase by ~37% as a result (assuming FY12 figures). With the outlook for ComfortDelgro’s overseas ventures in FY13 remaining positive, our focus shifts domestically where we expect a fare increase to materialise by mid-2Q13, which we feel much of the street has already priced in. Pending its upcoming 1Q13 results, we maintain our HOLDrating on ComfortDelgro with an unchanged fair value estimate of S$1.95.  

Midas Holdings: Secures S$17.3m in orders for Singapore MRT train parts
Midas Holdings announced last evening that it has secured S$17.3m (~CNY86.5m) worth of orders from longstanding customer Alstom Transport S.A. This entails the supply of train car body parts for 18 train sets (or 108 train cars) for Singapore’s North East Line and 24 train sets (or 72 train cars) for the Circle Line. Delivery is scheduled to take place from 2013 to 2015.This is Midas’ second international contract win of the year and helps to boost its total orders won YTD to ~CNY379m, already higher than the CNY325m in orders won for the whole of 2012. Given that the Singapore government has committed to spending ~S$1.75b from 2013 to 2019 to upgrade and purchase assets for its rail system, we believe that future contract wins for similar projects are possible for Midas. We retain our forecasts as we have already assumed such contract wins in our assumptions. Maintain BUY and S$0.595 fair value estimate on Midas, based on 1.2x FY13F P/B. 

From CIMB:

STX OSV

Looming Brazilian harvest

TRADING BUY - Trading Call | S$1.22 - Tgt. S$1.38

We believe that the lacklustre share price of STX OSV, which has adopted a new brand name, VARD, could be catalysed by sizeable Brazilian orders worth up to US$530m or NOK3bn (translating to 27% of our FY13 order target) in the next couple of weeks. Given its recent underperformance and sentiment uplift from this headline-win, we upgrade VARD to Trading Buy from Neutral. The stock is not an Outperform as there could be downside risks to the company’s longer-term margins profile. Further, the absence of communications from the new majority owner, Fincantieri, could put off longer-term investors. No change to our EPS or target price, still at 8x CY14 P/E, one s.d. above its trading mean. 

From Maybank KE:
Keppel Land: Soft Start To Be Expected; Maintain Buy, TP $4.78
KPLD SP | Mkt Cap USD4.9b | ADTV USD10.0m
We expect KepLand to report a 72% decline in 1Q earnings on 17 April, but we reiterate that the volatility in quarterly earnings is to be expected. We maintain our BUY recommendation and target price of SGD4.78.
Rather than focusing on the headline numbers, we would instead focus on KepLand’s execution. In particular, its home sales in China have already improved by >80% YoY for the period of 2M13 and we expect demand from first-timers and upgraders to persist.
The stock still trades cum-dividend until 23 April. A higher dividend for FY13 is still possible should MBFC Tower 3’s commitment level exceed 90% this year and subsequently divested.

From UOB KH:
Hutchison Port Holdings Trust (HPHT SP)
There has been a strike at HPHT’s HIT since 28 March. Operations at HIT
were smashed in the first few days but have resumed to 80% of the normal
level after some workers went back to work. The direct financial impact is
insignificant (less than 2% of 2013F net income) but is still too early to
evaluate the long-term impact. Maintain BUY. Target price: US$0.96.

Wilmar International (WIL SP)
Africa Is The New Expansion Focus
In its 2012 annual report, Wilmar highlighted its long-term strategy to focus
on greenfield projects with high potential despite the longer gestation. Key
expansion will be in the fast-emerging markets in Africa - Ghana and Nigeria.
Consumer packs continue to be a strong market leader. The impact of the
country diversification strategy is starting to show in the higher contribution
from non-China markets. Maintain BUY. Target price: S$3.80. 
  
From DBS:
Midas has won a S$17.3m supply contract for train car body
module components for new trains on Singapore's North East
Line (NEL) and Circle Line (CCL). This will grow their order
book to c. RMB800m. The supply contract is for 2013 to
2015, for 18 train sets or 108 train cars for NEL and 24 train
sets, or 72 trains for the CCL. This is positive for Midas as
they have been winning export orders and metro contracts in
China of late, especially as we wait for high speed train
orders to come through. Maintain BUY, TP S$0.60.