Local Brokerages Stock Call 19 April 2013

From OCBC:
Keppel Corporation: Results in line; firm operating margins
Keppel Corporation (KEP) reported a 35.3% YoY decrease in revenue to S$2.76b and a 52.5% drop in net profit to S$357.0m in 1QFY13. However, net profit in 1QFY12 was bumped up by lumpy contributions from Reflections at Keppel Bay. Excluding Reflections, we estimate revenue fell by about 7% YoY while net profit slipped 16%. Results were within our expectations. The O&M division turned in a good operating margin of 14.1%, and management is pleased with the performance. Encouragingly, management “does not necessarily expect” margins to fall when the profit recognition of its Sete Brasil semi-subs kicks in. Meanwhile, the group is still seeing “strong market interest” in its core products. YTD, new order flow of about S$2.2b is also in line with our expectations. Maintain BUY with S$12.68 fair value estimate.

Technology Sector: Macro jitters still present
Recent economic data points such as the 1Q13 YoY GDP contraction of Singapore and economic slowdown in China have illustrated that the macroeconomic environment remains uncertain and fraught with fragilities. Nevertheless, bellwether tech company Intel Corp is anticipating a stronger 2H, while the MAS has forecasted for gradual improvement in Singapore’s economic growth for the rest of the year. We believe that 2013 would remain as a backend loaded year for the cyclical tech sector, which is in line with the recovery in the global economy. We maintain NEUTRAL on the tech sector and prefer companies with strong balance sheets, sustainable dividend yields and healthy operating cashflows. Our top pick is Venture Corporation [BUY; FV: S$9.08].

CapitaCommercial Trust: 1Q13 DPU up 3.2% YoY
CapitaCommercial Trust (CCT) reported 1Q13 distributable income of S$55.7m – up 3.3% YoY. This translates to a 1Q13 DPU of 1.96 S-cents, which is 3.2% above the 1.90 S-cents paid in 1Q12. We see this to be in line with expectations and 1Q13 distributable income now makes up 24% of our full year forecast. The growth in distributable income was mainly due to a full contribution from 20 Anson (acquired in Mar-12) and higher rentals at HSBC Building. CCT’s portfolio occupancy remained fairly stable at 95.3% in 1Q13, down marginally from 97.2% in 4Q12, mainly due to Cisco’s relocation from Capital Tower. We continue to see positive rental reversion in the portfolio – average monthly portfolio rents increased from $7.64 psf in 4Q12 to $7.83 psf in 1Q13. In addition, CapitaGreen remains on track for completion in 4Q14. We would speak further with management regarding these results and, in the meantime, maintain BUY with a fair value estimate of S$1.80.

Keppel Land: Top bid at Kim Tian Rd GLS tender
Yesterday evening, Keppel Land (KPLD) put in the top bid of S$550.3m (S$1163 psf GFA) for a 99-year GLS residential site at Kim Tian Rd near Tiong Bahru MRT station. The tender attracted 11 bidders and KPLD’s bid was 7.2% above the second highest. The site has a land area of 118.3k sq ft and a maximum allowable GFA of 473.2k sq ft, which should yield a condominium development of ~500 units. We estimate breakeven and selling prices at S$1,750 psf and S$1,950 psf, respectively, and see this transaction accreting 4.4 S-cents to KPLD’s RNAV. In addition, we note that recent transactions at nearby Twin Regency are averaging ~S$1,750 psf. Maintain BUY on KPLD. Pending the award of the site, our fair value stands unchanged at S$4.53 (25% discount to RNAV).

KSH Holdings: Wins construction contract for its Beijing condominium
KSH announced that its 50%-owned JV based in China (KSHEC Beijing) has won a RMB157m (S$31.4m) construction contract for Liang Jing Ming Ju Phase 4 (LJMJ), which is its 45%-owned condominium development project in Beijing. For this contract, KSHEC Beijing would construct three blocks of 11-13 storey residential buildings with office and commercial units as well as two levels of basements. The construction would commence immediately with a duration of ~25 months. We note that it is KSH’s first construction contract in China. Maintain BUY with a fair value estimate of S$0.73; our SOTP valuation values KSH with a 5x PE multiple for the construction segment and a 40% discount to RNAV for its property segment. (Eli Lee)

Triyards Holdings: Acquires logistics and supply base for A$6.75m
Triyards Holdings (Triyards) announced that it has purchased a well-sited logistics and supply base within the shipbuilding and marine-related belt of Western Australia (WA) for A$6.75m. The base serves as a critical construction materials and equipment supply base to the offshore oil and gas developments operating off the coast of WA. The waterfront site is also located near the port of Fremantle, WA’s largest and busiest general cargo port. The base is already income generating, and Triyards will benefit from the growing and logistics business. Triyards’s ship repair business will also benefit from the volume of port and LNG activities in the area. Meanwhile, the acquisition will be funded via cash and issuance of new shares to the seller, Henderson Supply Base Pty Ltd. Pending details from management, we maintain our BUY rating and S$1.07 fair value estimate on the stock.

Yoma Strategic Holdings: Agreement with The Hongkong and Shanghai Hotels
Yoma announced that it has entered into a non-legally binding heads of agreement with the Hongkong and Shanghai Hotels (HSH) for the proposed hotel development (the former Burma Railway Company building) on the site of the Landmark Development, subject to Yoma completing the acquisition of the site. Under the agreement, HSH would subscribe for a 70% majority interest in the JV for proposed hotel. We understand that the financial commitments of the respective parties, with respect to the purchase of the land development rights and redevelopment costs, are still being worked out. Maintain SELL with a 12-month fair value estimate of S$0.71 (20% premium to RNAV); while we believe the company holds meaningful franchise value as a leading developer in Myanmar, current shares are pricing in most positives at these levels.

From UOB KH:
Keppel Corp- 1Q13: Relief in strong O&M operating
margin. (KEP SP/BUY/S$11.25/Target: S$12.80)
Maintain BUY and raise our target price from S$12.55 to
S$12.80, based on a revised sum-of-the-parts (SOTP)
valuation, which still values Keppel’s O&M business at 18x
2014F PE.

Mapletree Logistics Trust- 4QFY13: Watch out for
acquisitions. (MLT SP/BUY/S$1.30/Target: S$1.41)
Maintain BUY with a higher target price of S$1.41 (from
S$1.38), based on DDM (required rate of return: 6.9%...

Bumitama Agri- Marginal impact from NGOs’ petition to
stop land clearing (BAL SP/BUY/S$1.00/Target: S$1.12)
Maintain BUY with target price of S$1.12, based on 14x 2014F
PE. We like BAL for its young age profile and best oil extraction
rate to support its 5-year net profit CAGR of 37%.

Super Group- Building a solid platform for growth
(SUPER SP/BUY/S$3.91/Target: S$4.54)
Consistent delivery + strong cashflow = BUY. We maintain BUY
on Super with a PEG-based target price of S$4.54. At our target
price, the implied 2013F PE is 22.1x…

Sino Grandness Food- Strong orders from Chengdu Trade
Show (SFGI SP/BUY/S$1.25/Target: S$1.66)
Maintain BUY on Sino Grandness (SGF) with a higher target
price of S$1.66. We expect its beverage segment to achieve a
higher profit of Rmb230m

DBS Group Holdings (DBS SP, D05) -
Technical BUY with +7.3% potential return
Last price: S$15.65
Resistance: S$16.80
Support: S$15.30
BUY with a target price of S$16.80 with tight stops placed
below S$15.30. The stock appears to be trending above its
50-day moving average and rising trendline and looks poised
to break above its middle Bollinger band to continue its
uptrend. Its Stochastics indicator has formed a bullish
crossover and RSI indicator has turned up from a reading of
40. Watch to see if its MACD could form a bullish crossover
above its centreline.
Our institutional research has a fundamental BUY with a
target price of S$19.90.

Memstar Technology (MSL SP, 5MS) –
Technical BUY with +35.8% potential return
Last price: S$0.092
Resistance: S$0.105/0.125
Support: S$0.085
BUY with a target price of S$0.125 with stops placed below
S$0.088. The stock has been forming mostly higher lows and
appears to be supported above its rising 75-day moving
average. Prices have also rebounded from its lower Bollinger
band. Its Stochastics indicator has formed a bullish crossover
and RSI indicator has turned up from a reading of 40. Watch
to see if the stock could close above S$0.105 for further
upside.

Hi-P International (HIP SP, H17) -
Technical SELL with +20.2% potential return
Last price: S$0.69
Resistance: S$0.73
Support: S$0.55
SELL with a target price of S$0.55 with tight stops placed
above S$0.73. The stock has been resisted near its declining
75-day moving average and has close below its lower
Bollinger band band. A break below S$0.65 is likely to see
more selling pressure. Its RSI indicator has turned down
below a reading of 60. Its Stochastics has formed a bearish
crossover. Watch to see if its MACD indicator could break
below its centreline.

From DBS:
Mapletree Logistics Trust: BUY S$1.30; Bloomberg: MLT SP
Waiting to strike;
Price Target : 12-Month S$ 1.37 (Prev S$ 1.22)
•        Resilient results driven by acquisitions
•        Decent growth profile  backed by a defensive portfolio
•        Maintain BUY, TP S$1.37
Growth led re-rating, BUY TP S$1.37. We believe that
acquisitions are likely to be re-rating catalysts for the stock.
Maintain BUY, with a revised TP S$1.37 based on DCF. 

Keppel Corp’s 1Q13 results slightly below; O&M orderbook
drawdown appears slower than expected probably due to
timing of recognition of projects. However, O&M operating
margins recover 0.6ppts q-o-q on productivity gains. Newbuild
demand remains buoyant. O&M orderbook moved up to
S$13.1bn (Mar 13), thanks to strong YTD order wins of
S$2.2bn (S$600m secured in Apr 13), particularly jack ups. We
have tweaked our FY13/14 core net profit by -0.7%/0.3%
following adjustments to our orderbook recognition schedule.
Maintain BUY; TP S$13.00.

Cambridge Industrial Trust 1Q13 results in line. Completed
acquisitions and asset enhancement initiatives (AEIs) are
expected to contribute positively; we see further development
and enhancement opportunities to come. Potential conversion
of rental reversions in 2013-2014 is likely to remain stable.
Maintain BUY, TP S$0.93.

Ezion is expanding its presence in Gulf of Mexico with a 6th
Service rig contract worth US$148.6m over 7 years (5+2)
through a 50/50 JV. This will raise FY13/14 net profit by
1.0%/2.4%. We expect further growth backed by recently
strengthened balance sheet. Maintain BUY with a higher TP of
S$2.47 (Prev S$ 2.42).