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Wednesday, April 24, 2013

Local Brokerages Stock Call 24 April 2013

From OCBC:
First REIT (FREIT) reported its 1Q13 results which were within our expectations. Gross revenue grew 25.0% YoY to S$17.5m, underpinned by a full-quarter of contribution from the two properties it acquired on 30 Nov 2012. Distributable amount to unitholders and DPU increased by 16.5% and 9.4% YoY to S$11.6m and 1.74 S cents, respectively, if we exclude a special distribution made in 1Q12. Although FREIT is currently finalising its proposed acquisition of two hospitals from its sponsor Lippo Karawaci (subject to unitholders’ approval at an EGM), we expect it to continue its search for more yield accretive assets in the near future. We reiterate our HOLD rating and S$1.31 fair value estimate on FREIT as we believe that its valuations are not compelling (trading at 1.6x FY13F P/B).

Tiger Airways
Following the TGR AU sale approval, investors can now look to TGR SG as the main growth driver for the Group. As a recap, TGR SG recorded an impressive set of growth figures for 9MFY13 (revenue +30.7% YoY to S$444m) while its operating statistics for the quarter just ended has been equally positive and encouraging. Although TGR will continue to experience some drag from TGR AU – albeit at a lower 40% proportion – and SEAir (which is still in its infancy), we expect TGR SG’s performance to more than offset any draw-downs and continue to lead the ongoing recovery process for TGR. We reiterate our BUY rating on TGR with a lower fair value estimate of S$0.79 (S$0.86 previously) after taking into consideration the recent rights and PCCS issuance.  

Nam Cheong Ltd: Wins US$59m sale contracts
Nam Cheong Ltd has secured two sale contracts with a total value of US$59m for two units of accommodation work barges (AWBs). The AWBs were sold to Perdana Petroleum Berhad, an established offshore marine service provider in Malaysia. The vessels are constructed as part of Nam Cheong’s build-to-stock series in its subcontracted yards in China and are scheduled for delivery in 1H14. With this latest win, Nam Cheong’s order book stands at RM1.4b. We currently have a BUY rating with S$0.30 fair value estimate on the counter.

From UOB KH:
First Resources - 1Q13 results likely to be weaker qoq and yoy on rising production cost and weak ASP, partially mitigated by better CPO production growth
(FR SP/BUY/S$1.75/Target: S$2.35)
FY13F PE(x): 12.8
FY14F PE(x): 10.2
First Resources’ (FR) recent share price weakness is mainly due to the concern over its low 1Q13 FFB production, which was mainly due to its oil palm trees in Riau’s estates undergoing the biological stress cycle after two good years of production, vs. peers who are seeing a recovery in FFB production. We believe the market has over reacted as FR’s production is expected to pick up in 2H13 to meet management guidance of a 10% growth. Trees are taking a rest. FR reported 1Q13 FFB production of 394,757 tonnes (-23.7% qoq, -4.0% yoy) and CPO production growth of -20.9% qoq (+4.3% yoy). The decline in
production is likely due to biological stress after two good years of production and strong production in 1Q12. FR’s production did not suffer unlike that of peers in 1Q12. Based on our ground check, estates located in the same areas are showing a similar trend.
Thus, the weakness in production was a locality issue and not due to any management weakness.

Maintain BUY and target price of S$2.35, based on 14x 2014F PE, at mid-cycle valuation. We like FR for its hands-onmanagement team, young age profile and efficiency. We have adjusted our CPO price assumption to US$852/tonne (RM2,600/tonne) for 2013 as we believe FR is unlikely to achieve a CPO ASP of US$920/tonne (RM2,900/tonne) due to theweaker-than-expected CPO prices ytd. However, prices are expected to improve in 2014 (our assumption: RM2,950/tonne) as external demand would start to pick up and domestic demand would improve. Therefore, we cut our net profit forecast for 2013 by 20% to US$175m. We forecast net profit of US$175m, US$219m and US$236m for 2013, 2014 

and 2015 respectively. 
From CIMB:

Mapletree Industrial Trust 
Eyes on The Signature
NEUTRAL - Maintained | S$1.56 - Tgt. S$1.62
US$2064m | Avg.Daily Vol: US$4.99m | Free Float: 69.70%

We expect positive rental reversions at MINT’s flatted factories to mitigate downside at The Signature. Though headline yields are decent in the current climate of compressed yields, we maintain a Neutral rating pending clarity on backfilling and further growth catalysts. 4Q/FY13 DPUs were slightly above street and our expectations, forming 26/102% of our FY13 forecast. The variance was due to higher short-term business park rents. We raise DPU estimates and our DDM-based target price (discount rate: 7.3%) factoring in stronger rental assumptions and its recent BTS development.

From DBS:
Nam Cheong - On track to achieve FY13/14 sales targets;
maintain BUY with TP of S$0.30

Nam Cheong announced another round of vessel sales worth
US$59m for two accommodation work barges to be delivered
in 1H-2014. The pricing is within expectations and the vessels
were sold to repeat customer Perdana Petroleum, one of the
major offshore services providers in Malaysia. YTD, Nam
Cheong has won orders for 6 vessels across its build-to-stock
and build-to-order business models and is on track to achieve
FY13/14 sales targets. Orderbook now stands at about
RM1.4bn. This underpins robust earnings trajectory for the
Group in FY13/14. We expect Nam Cheong to secure order
wins for another 8-10 vessels in FY13, which will cover FY13
completions and half of FY14 completions. Maintain BUY with
TP of S$0.30. Expect the stock to firm up after holding at
$0.245-0.25 over the past 2-3 weeks.

Vard Holdings (previously STX OSV Holdings) has secured a LOI
with Simon Mokster Shipping, Norway, for design and
construction of 1 PSV. To be delivered in 1Q-2015 from
Norway yard, the vessel will be built to internal design PSV 06
LNG with dual-fuel LNG/ diesel-electric capabilities. The
contract value is not disclosed but we estimate could be about
NOK400m, based on previous similar orders. When finalised,
this will bring YTD FY13 contract wins to NOK2.9bn, or 23%
of our full year order win estimate of NOK12.5bn. Vard
remains a key proxy to the buoyant subsea market; maintain
BUY with TP S$1.57. 

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