Local Brokerages Stock Call 12 July 2013

From OCBC:

Triyards Holdings: Awaiting new orders
Summary: Triyards Holdings (Triyards) reported a 61% YoY drop in revenue to US$65.7m and a 55% decrease in net profit to US$7.5m in 3QFY13, bringing 9MFY13 net profit to 72% of our full year estimate, and in line with expectations. The fall in revenue was mainly due to lower revenue recognized for the Lewek Constellation – construction progress for this vessel had peaked in 2HFY12. Meanwhile, gross profit margin was higher at 19.2% in 3QFY13 vs 12.5% in 3QFY12. Management reiterated that it is receiving healthy enquiries for the construction of SEUs, and received favourable feedback during its roadshows of its 3^rdgeneration SEU. We await new orders and news of a potential yard acquisition as the group pares down its debt. Maintain BUY with S$1.07 fair value estimate.

Vard Holdings: Continued difficulties in Brazil
Summary: Vard Holdings Limited (VARD)’s 2Q13 results came in below ours and the street’s expectations, despite issuing a profit warning earlier. The group reported a net loss of NOK20m for 2Q, bringing its 1H13 net profit to NOK168m – just 28% and 23% of ours and the consensus FY13F estimate. The poor performance was mainly due to operational challenges in its Niteroi and Promar yards in Brazil, which would likely need more time to stabilize. Its order-book also declined by about 11% to NOK14.0b. Downgrade from Hold to SELL with lower FV of S$0.80 (previously S$0.93). 
 
ST Engineering: ST Aerospace won S$430m of contracts in 2Q13
Summary: ST Engineering (STE) announced that its aerospace arm, ST Aerospace, has secured new contracts worth about S$430m in 2Q13. This includes the exclusive component Maintenance-By-the-Hour contract worth S$32.25m awarded by Spring Airlines Japan, and the five-year Multi-crew Pilot Licence training contract from Qatar Airways announced in June 2013.  In the VIP cabin reconfiguration business, ST Aerospace secured three deals involving Boeing Business Jets (BBJ): a cabin design contract in Eastern Europe, a 12-year maintenance check and interior refurbishment project on a Boeing 737 belonging to a returning Middle Eastern customer, and a maintenance and interior modification contract awarded by a US customer. The magnitude of the contract wins is in line with our expectations. We maintain our fair value estimate of S$3.97 and HOLD rating on STE. 
 
Ezra Holdings: Profit bumped up by one-off items
Summary: Ezra Holdings (Ezra) reported a 19% YoY rise in revenue to US$317.1m but saw a 68% drop in net profit to US$7.2m in 3QFY13, such that 9MFY13 revenue and net profit accounted for 75% and 72% of our full year estimates, respectively. However, if we were to strip out one-off items such as the disposal of Ezion shares which contributed to a US$67.4m gain, we estimate core net loss of US$54m for the quarter. Gross profit margin was only 1% vs 17% in 3QFY12. Meanwhile, the group announced it has won new contracts worth more than US$450m since its last quarterly results, bringing its order book to more than US$2b. Pending details from management, we put our Hold rating and fair value estimate of S$1.10 under review. 
 
Dyna-Mac Holdings: Secures S$135m fabrication orders

Summary: Dyna-Mac Holdings has secured a new order worth about S$135m from a regular client for the fabrication of topside modules, manifolds and flare towers for two FPSOs to be carried out in its Singapore and Guangzhou yards. Production will commence in late 3Q2013. As the group is expected to report its 2Q results in the coming weeks, we put off adjusting our FY13F estimates for now. Maintain HOLDrating with an unchanged fair value estimate of S$0.44.

Singapore Economy: 2Q13 GDP grows 15.2% QoQ, boosted by manufacturing
Summary: Based on advance estimates from the MTI, the Singapore economy grew 3.7% YoY in 2Q13, compared to 0.2% in 1Q13. On a QoQ seasonally-adjusted annualized basis, the economy grew by 15.2%, faster than the 1.8% growth in the previous quarter. This also beat street’s expectations for a 8.1% expansion, based on a Bloomberg survey. Manufacturing expanded by 37.6% QoQ, reversing the 12.7% contraction in 1Q13, mainly due to strong growth in the biomedical and electronics clusters. Construction grew by 9.0% QoQ, moderating from the 14.3% expansion in 1Q13. Meanwhile, services rose 9.0% vs 8.1% in the previous quarter, primarily supported by a robust recovery in the wholesale & retail trade sector and the transportation & storage sector. 

From UOB KH:
Starhill Global REIT (SGREIT SP, P40U) –
Technical BUY with +10.5% potential return
Last price: S$0.85
Resistance: S$0.99
Support: S$0.80
BUY with a target price of S$0.95 with tight stops placed
below S$0.82. The stock is likely to trend higher after it
rebounded from its lower Bollinger band and closed
above its 200-day moving average as well as its mid
Bollinger band. Its MACD indicator has hooked up with
its Stochastics indicator, forming another bullish
crossover. Watch to see whether its potential dead
cross on its 50-day and 200-day moving averages could
be negated. Our institutional research has a
fundamental HOLD with a target price of S$0.92.

Hutchison Port Holdings Trust (HPHT SP, NS8U) –
Technical SELL with +11.2% potential return
Last price: US$0.755
Resistance: US$0.79
Support: US$0.67
SELL with a target price of US$0.67 with tight stops
placed above US$0.79. The stock appears to rebound
in the downtrend and may face resistance near its 200-
day moving average, which acted as a support
previously, and could potentially turn as resistance as
prices have traded below it. Its MACD indicator has
traded below its centreline. Watch to see if its daily 14-
day RSI indicator will fail to move above 50. Our
institutional research has a fundamental BUY with a
target price of US$0.88.

Global Yellow Pages (YPG SP, Y07) –
Technical BUY with +14.4% potential return
Last price: S$0.107
Resistance: S$0.133
Support: S$0.075
BUY with a target price of S$0.125 with tight stops
placed below S$0.10. The stock is likely to rebound
further after prices appear to rebound from its rising 50-
day moving average. Its RSI indicator has turned up
while the positive directional index appears to have
negated its potential negative crossover. Watch to see if
the stock could break above its declining resistance line.

Triyards Holdings- 3QFY13: In line; ramps up ship repair capacity.
(ETL SP/BUY/S$0.74/Target: S$1.11)
FY14F PE(x): 5.2
FY15F PE(x): 5.0
Profit in line. Triyards reported a net profit of US$7.5m for 3QFY13, in line
with our forecast of US$7.3m. 9MFY13 net profit of US$21.1m formed
70.3% of our full-year profit forecast.
Profit dip due to recognition of lumpy contract. 3QFY13 revenue and
profit declined by 61% yoy and 55% yoy respectively, mainly due to lower
revenue recognised for the construction of the subsea construction vessel
Lewek Constellation (Constellation). The Constellation is currently berthed
in Vietnam and is expected to leave the yard in September for final
outfitting work.
Maintain BUY and unchanged 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.

From DBS:
Vard Holdings reported weak results in 2Q, in line with profit
warning, mainly due to cost overruns at both Brazil yards.
Margins may not recover as early as we had expected earlier.
FY13/14 earnings cut by another 39%/ 19%. Order wins in
2H13 should be within expectations but unlikely to
outperform. Maintain HOLD with lower TP of S$0.88 (Prev S$
1.16).

We hosted SREITs from the industrial, hospitality and
retail sectors. REITs remained generally upbeat about
occupancies and rents, citing still-strong tenant
performance and positive rental reversions as indicators of
organic growth going forward. S-REITs generally expect
Net property income (NPI) growth to drive or support
valuations. In terms of picks, we like Cache Logistics Trust
(BUY, TP S$1.47) for its locked-in earnings growth and
acquisition opportunities, Fraser Commercial Trust (BUY,
TP S$1.69) for its strong capital management and organic
growth from Alexandra Technopark, and Mapletree
Commercial Trust (BUY, TP S$1.53) for its strong
reversionary growth profile, particularly from VivoCity. 

From DMG:
Ausgroup sells its Tuas property for SGD39.4m. Ausgroup 
(AUSG) sold its Tuas waterfront property to Boustead Singapore
 (BOCS SP, NR) for SGD39.4m vs its SGD21.7m book value. 
AUSG valued the property at SGD28.8m based on vacant possession
, excluding all plant and equipment but including the waterfront area.
 This compares with the open market value of SGD44.6m that BOCS
 obtained from its valuer based on income capitalization and discounted
 cash flow. We estimate that AUSG could recognize a profit of AUD5m
 for FY14F from this deal. It will also enter into a leaseback arrangement
 with BOCS for the next 12 years. The estimated annual rent of SGD3.3m
 translates into an attractive unleveraged yield of 8.4% for BOCS but for
 AUSG, the net rent (minus the deferred profits on sale) of about SGD2.2m
 comprises a significant 9% of its FY14F pretax income. We think this is a
 poor deal for AUSG and maintain SELL on the stock, with our TP at 
SGD0.33. 

From Maybank KE:
Vard Holdings: A Writeoff Year; Downgrade to Hold, TP $0.95
VARD SP | Mkt Cap USD808m | ADTV USD5.9m
Vard’s 2Q13 results were lower than our adjusted expectations following the company’s profit guidance on 28 June 13. 2Q13 revenue came in at NOK2.9b (-1% YoY, +7% QoQ) with a net loss of NOK20m (-118% YoY, -111% QoQ).
Vard commented that it has used its best judgement to provide for all the potential losses for the Brazil projects in 2Q13, but also qualifies that it cannot guarantee that no other unforeseen losses may arise. We expect profitability for outstanding projects at Niteroi yard to remain low. Our FY13F EBITDA margin assumption is lowered to 7.8% (from 9.4%).
We cut FY13F/14F/15F earnings by 29%/16%/12%. Expect more consensus earnings cuts which would weigh down on share price. We downgrade to hold with TP lowered to SGD0.95 as we await contract win catalysts to rerate the stock. No change in dividend policy of minimum 30% payout but no interim dividend was declared this quarter.