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Friday, April 12, 2013

Local Brokerages Stock Call 12 April 2013

From DBS:
Del Monte Pacific - Initiate coverage with a BUY rating
and target price of S$0.97

We initiate coverage of Del Monte Pacific with a BUY rating
and target price of S$0.97, offering >30% total return,
including 3.3% yield. The stock presents an opportunity for
investors to leverage on robust growth of the Philippines
economy. We are projecting 25% earnings CAGR over FY12-
15F, supported by: (i) rising domestic sales driven by its
branded products and larger distribution network; (ii)
continued growth of the S&W brand in the Asia Pacific region;
(iii) expiry / revision of long term supply contracts to lift

margins in FY15F; (iv) expiry of PET toll packing contract
in 3Q14, with potential to improve margins with new
contracts; and (v) cost savings from its waste-to-energy
project. Rerating catalysts include better trading liquidity
and continued earnings growth.

Ezra posted 2QFY13 recurring net loss of US$2.4m
compared to our expectation of a US$3m net profit.
Results were slightly below expectations in what is usually
a seasonally weaker quarter. Revenues were largely in line
at US$247m (17% growth) but EBIT margin of 3.4%
came in below our forecast of 4%, as the subsea
operations are still being ramped up. Separately, the
group reported US$120m in new contract wins across its
subsea services and offshore chartering segments. Will
provide more details after the analyst briefing today. We
currently have a BUY call with a target price of S$1.58.

From CIMB:

Telco - Overall
Singapore visit takeaways
UNDERWEIGHT - Maintained
From our recent visit to the Singapore telcos, we gather that StarHub is currently in talks with FA Premier League (FAPL) but we believe that the rights to the Barclays Premier League (BPL) matches are less attractive given the limited time before the season starts. We also note that competition in fibre broadband has intensified. We maintain Underweight on the sector as de-rating catalysts are expected from SingTel given regulatory and competitive risks. Our top pick is StarHub.

CPO survives the price band test
NEUTRAL - Maintained
We are encouraged by the evidence presented by Dr Fry at yesterday's PAC seminar that the emergence of biodiesel demand has created a floor price for CPO. There is potential upside of about US$250 per tonne (up 30%) for the CPO price, should it revert to its historical average premium over crude oil. This assumes the crude oil price stays at the current level and palm oil stocks normalise. However, these positive factors are negated by concerns over rising palm oil supplies from Indonesia and potential decline in crude oil price due to the emergence of shale gas. We maintain Neutral on the sector and keep Wilmar and BW Plantations as our top picks. 

From OCBC:
Triyards Holdings: Results in line; bright prospects
Summary: Triyards Holdings (Triyards) reported a 23% YoY rise in revenue to US$79.4m and a 157% increase in net profit to US$7.1m in 2QFY13, such that results were in line with our expectations. Revenue increased due to two self-elevating units (SEUs) which started construction, as well as completion of variation order on an offshore support vessel. Gross profit margin in 1HFY13 was stable compared to 1HFY12. Management is receiving healthy enquiries for the construction of SEUs as well as customized supply vessels. The group has also completed the design of the third generation SEU. Unlike the first and second generation SEU, this latest one has drilling capabilities, and management is optimistic about its prospects. Maintain BUY with S$1.07 fair value estimate, based on 8x FY13/14F earnings.

Mapletree Logistics Trust: Valuation looks fair now
Summary: We believe investors are finally acknowledging Mapletree Logistics Trust’s (MLT) attractiveness, as evidenced by its recent strong unit price performance. At a P/B ratio of 1.45x, however, we believe MLT is now fairly priced. While ~55% of its revenue is derived from overseas assets, we are mindful that a substantial 658k sqm of supply in warehouse space is expected to be delivered to the Singapore warehouse market in 2013. This is likely to exert pressure on warehouse occupancy rates as well as cap the rise in rentals and the rate of positive rental reversions achieved by MLT in the near term. In addition, the introduction of the cooling measures in the industrial market and upfront land premium by JTC has inevitably made investors more cautious as it may now be more onerous for industrial landlords to acquire properties. Given the market conditions, we believe that any upside in MLT’s units is limited at the current juncture. Downgrade MLT from Buy to HOLD on valuation grounds. Our fair value is now raised from S$1.25 to S$1.34 as we tweak our RNAV assumptions and roll over our valuation to FY14.

Ezra Holdings: Expect delays in award of projects
Summary: Ezra Holdings (Ezra) reported a 17% YoY increase in revenue to US$247.1m and a 34% rise in net profit to US$29.7m in 2QFY13, such that 1HFY13 revenue and net profit met 42% and 71% of our full year estimates, respectively. However, we note that net profit was bumped up by a US$30m disposal gain on fixed assets; excluding that, core net profit was minimal. Uncertainty in the Eurozone has weighed on sentiments, and project execution and awards have been delayed relative to industry participants’ expectations in 2012. Pending an analyst briefing later, we put our HOLD rating and fair value estimate of S$1.30 under review.

Lian Beng: Uninspiring 9M13 performance
Lian Beng’s 9M13 PATMI decreased 25.7% YoY to S$30.1m despite revenue increasing 5.1% YoY to S$350.7m on higher revenue recognition from construction projects. The decline in profit was attributable to lower gross margin, higher operating expenses and a one-off gain of S$7.9m on the sale of an investment property in 9M12. Lian Beng’s construction order book, including recent contract wins of Bartley Ridge, and projects at Sunview and Tampines Crescent, totals S$986m. Our fair value estimate and ratings are UNDER REVIEW pending a change in analyst.

TEE International: Weak 3Q13 results
Summary: TEE International’s 3Q13 net profit fell 22% YoY to S$1.4m, taking its 9M13 net profit to S$6.7m (down 13% YoY, forming just 41% of our full-year earnings forecast for FY13). Its revenue rose 109% YoY to S$53.0m in 3Q13, but gross profit fell 14% to S$5.7m as cost of sales soared 152% to S$47.3m. The latest results are disappointing and we expect TEE’s share price to weaken in the short term. We put our fair value estimate of S$0.30 and Hold rating for TEE UNDER REVIEW pending a change in analyst.

UOL Group: Top bid for Sengkang West Way
Summary. Yesterday evening, UOL put in the top bid of S$262.1m for the GLS site at Sengkang West Way. The tender attracted eight bids and UOL’s was 3.4% above the second higher bidder’s. The 99-year site has a land area of 178.7k sq ft and is located near the future Seletar Mall and Sengkang Riverside Park. The maximum GFA allowed is 536.2k sq ft, which can yield around 550 homes. UOL’s bid translates to a psf price of S$489 psf, which we believe is reasonable. We expect breakeven and selling ASPs at S$900 psf and S$1,000 psf, respectively, which translates to an estimated RNAV accretion of 5.5 S-cents per share. Pending the award of the site and more details regarding the site plans, we maintain our HOLD rating with an unchanged fair value of S$6.01 (20% discount to RNAV).

Singapore Economy: Contraction in 1Q13
Summary: According to advance estimates from the MTI, the Singapore economy contracted by 0.6% YoY in 1Q13, lower than the street’s expectations of zero growth and also worse than the 1.5% growth seen in 4Q12. On a seasonally adjusted, annualised basis, the economy contracted by 1.4% QoQ, compared to the 3.3% growth in 4Q12. Manufacturing contracted by 11.3% QoQ, vs a 3.1% growth in 4Q12, largely due to lower output in the biomedical manufacturing cluster. Construction grew by 15.1%, compared to 4Q12’s 3.9% negative growth. Services continued to expand by 1.8% after 4Q12’s 2.5% rise. Meanwhile, MAS has announced no change to the slope and width of the S$NEER policy band, as well as the level at which it is centred. This is assessed to be appropriate for containing inflationary pressures.

From UOB KH:
Triyards Holdings- 2QFY13: Pleasantly surprised; further
uplift from new third-generation liftboats. (ETL
SP/BUY/S$0.785/Target: S$1.11)

Maintain BUY and target price of S$1.11, pegged at 7.9x FY14F
PE, a 10% discount to peers’ average of 8.8x FY14F PE, due to
Triyards’ shorter operating track record and lumpy profit
recognition from Ezra’s Constellation, which comprises 17% of
FY14F net profit.

Oversea-Chinese Banking Corp- 1Q13 results preview:
Healthy loan growth, slowdown for insurance. (OCBC
SP/BUY/S$10.75/Target: S$12.68)

Maintain BUY. Our target price is S$12.68, based on 1.77x P/B,
derived from Gordon Growth Model (ROE: 11.5%, required
return: 7.8% and growth: 3.0%). 

Tianjin ZhongXin Pharmaceutical Group (TIAN SP, T14)
Technical BUY with +15.8% potential return
Last price: S$1.01
Resistance: S$1.17
Support: S$0.96
BUY with a target price of S$1.01 with stops placed below
S$0.96. The stock appears to find support near its potential
resistance-turned-support level near S$0.96 and has
rebounded near its 50-day moving average. Stochastics
indicator has formed a bullish crossover. Watch to see if the
stock could retest its recent high.

Silverlake Axis (SILV SP, 5CP) -
Technical BUY with +19.4% potential return
Last price: S$0.695
Resistance: S$0.83
Support: S$0.62
BUY with a target price of S$0.83 with stops placed below
S$0.62. The stock has rebounded near its resistance-turnedsupport
level at S$0.62 and has been trending up, supported
by its mid Bollinger band and its 50-day moving average. Its
MACD indicator appears to negate its bearish crossover
earlier and Stochastics indicator has formed a bullish
crossover. Watch to see the price action at around S$0.75.
Our retail research has a fundamental BUY with a target price
of S$0.91.

SPDR Gold Shares (GLD SP, O87) –
Technical SELL with +7.2% potential return
Last price: US$150.9
Resistance: US$155
Support: US$140
SELL with a target price of US$140 with stops placed above
US$155. The stock has failed to close the gap down on 3 Apr
13 and could be subjected to more selling pressure as prices
have been resisted by its mid Bollinger band and its declining
50-day moving average. Its MACD indicator has hooked down
and Stochastics indicator has formed a bearish crossover.
Watch for a break below US$149. 

From Maybank KE:
CWT Int: Keeping The Momentum Going; BUY, TP $2.05
CWT SP | Mkt Cap USD767.1m | ADTV USD1.1m
We  hosted a luncheon for CWT’s CEO, Mr Loi Pok Yen yesterday, which
was  very well-received by institutional investors. We expect the stock
 to  continue  re-rating  as  its  appeal  to institutions increase from
 higher profit base and stock liquidity.
 Management  remains  confident  of  organic  volume  growth  in  its
 commodity  trading business, with volumes targeted to double this year.
 Margins should improve on operating leverage.
 Management concurred that there is significant value in its warehouse
 portfolio, which we estimate at SGD1.25/ share. Reiterate BUY with a TP
 of SGD2.05. 

Lian Beng Group: No Bling For Now; HOLD, TP $0.49
LBG SP | Mkt Cap USD209.8m | ADTV USD1.0m
3QFYMar13  results  came  in  in-line  with  expectations. 9MFYMay13
revenue  and net profit are up 5.1% and down 24.2% YoY to SGD350.7m and
SGD30.7m  respectively, due to a lack of property earnings.  As we roll
over  our  earnings  forecast to FYMay14, we have changed our valuation
matrix from P/E to SOTP valuation to value its diversified businesses.
Four construction contracts have been secured year-to-date, bringing
its  orderbook  to SGD986m. We view this to be positive as it surpasses
our construction orderbook estimates of SGD300m verses SGD538m contract
With the recent run-up in share price, we believe Lian Beng has fully
 valued  the  incoming property earnings from M-Space @ Mandai and other
 partial property stakes. Maintain HOLD. 

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