Local Brokerages Stock Call 8 April 2013

From OCBC:
BreadTalk Group: Not fully baked yet

Summary: The 12% correction in BreadTalk’s share price over the past two days has helped to temper the sudden spike from late-Mar, and we take this opportunity to caution investors against getting too carried away. In our view, a takeover by Minor International is remote at this juncture. Despite impressive yearly double-digit revenue growth, BreadTalk has yet to translate the success to its operating margins. Although its ongoing expansion plans are partly to blame, the pace of the margin declines does create some concerns over its operational efficiencies in the long-run. In addition, with FY13 PATMI and dividend growth unlikely to differ much from recent performances, we deem BreadTalk expensive at current price levels. Keeping our fair value estimate of S$0.77, we downgrade BreadTalk to SELL and urge investors to take profit.

Chinese shipyards: Industry profitability remains under pressure

Summary: The share price performances of COSCO Corp (Singapore) and Yangzijiang Shipbuilding (YZJ) have been uninspiring in recent history. COSCO’s share price has fallen by about 21% in the past one year, while YZJ’s has decreased by about 25%. We believe this is mainly due to a lack of positive catalysts amidst the difficult operating environment in China. In terms of offshore projects, Chinese yards still lack the established track records of their Asian competitors, but their organization, efficiency and sophistication are on the rise. To compete, the Chinese yards are going after orders at lower margins and back-end loaded payment terms. This inevitably leads to lower profitability and higher working capital requirements. Over the near- to medium- term horizon, we believe that the industry dynamics is unlikely to change significantly. Maintain HOLD ratings for both COSCO (FV: S$0.90) and YZJ (FV: S$0.95). 

From Maybank KE:
Singapore Exchange: Bright Start To 2013; Maintain Buy TP SGD9.00
SGX SP | Mkt Cap USD6.5b | ADTV USD12.7m
We are highlighting that the upcoming set of 3QFY13 results will be of major significance. Our street-high net profit forecast of SGD94.5m for the quarter will represent SGX’s most profitable since the Great Financial Crisis.
The expected 22% yoy growth will be driven by an uptick in trading volume since the start of 2013 a surprising growth momentum in derivatives trading.
We reiterate BUY with a TP of SGD9.00, pegged to 29x FY13F, 1-standard deviation above historical mean.

Genting Singapore: Pick A Card, Any Card; Maintain Buy TP SGD1.67
GENS SP | Mkt Cap USD14.3b | ADTV USD37.0mGENS remains optimistic on its prospects going forward, especially in the VIP segment, while we are sanguine on potential margin compression from the newly-opened Marine Life Park (MLP). There are significant economies-of-scale in the operation of aquariums that will ensure a quick turnaround. Our 2013 earnings estimates are trimmed by 6% but 2014-15 forecasts are unchanged as we expect the MLP margin compression to be temporary. As our longer term earnings are relatively unchanged, we maintain our BUY call and SGD1.67 TP on 13.5x 1-year forward EV/EBITDA.

From DBS:
Wilmar - Near term downside risks; target price reduced to S$ 3.72 
Our analyst sees near term downside risks for Wilmar. Though
he continues to monitor the mass culling of poultry flocks in
China and thus far, there is no significant impact on soybean
crush margins, however, he expects 1Q13 Palm & Lauric pretax
to drop q-o-q on weaker Indonesian refining margins.
FY13F/14F/15F earnings were cut by 8%/8%/4% after
imputing lower palm oil refining margins. Maintain HOLD call,
target price reduced to S$ 3.72 (Prev S$ 3.88) as there is no
major near term re-rating catalyst. Despite near-term
challenges, Wilmar’ long term growth outlook is intact led
by recovering CPO prices, expansion in branded consumer,
sugar origination and investments in Africa.