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Tuesday, August 27, 2013

Local Brokerages Stock Call 27 August 2013

From OCBC:
Technology Sector: Slightly improved sentiment
Under our tech sector coverage, Venture Corp (VMS) reported earnings which were in-line with our expectations for the recently concluded 2QCY13 results season. However, core PATMI for ECS Holdings missed due to weaker-than-estimated gross margin. Encouragingly, a number of companies which we spoke to highlighted an improvement in sentiment amongst their key customers, which is in-line with the expected uptick in the global economy. However, we maintain NEUTRAL on the tech sector, as we believe that the economic recovery remains fragile. ECS [BUY; FV: S$0.56] is still our preferred pick within the sector given its cheap valuations (FY14F PER of 5.0x and P/NTA of 0.5x).

Suntec REIT: New city taking shape
Suntec REIT announced on 15 Aug that it has established a US$1.5b Euro Medium Term Note programme. We believe Suntec REIT may use this to address part of its refinancing needs due in 2014. If so, this will lock in part of its debts into fixed rates, enhance its debt maturity profile and improve its unencumbered asset ratio. Looking ahead, we remain positive on Suntec REIT’s performance. While its 2Q13 NPI and distributable income were down 38.5% and 18.7% YoY respectively due to the concurrent execution of Phases 1 and 2 of the remaking of Suntec City, we believe that the worst is likely over given that Phase 1 enhancement works were completed in Jun and the retail space there has since become operational. At current price, Suntec REIT trades at one of the lowest P/B in the S-REITs sector at 0.73x, while offering a compelling FY14F yield of 6.9%. We are revising our fair value from S$1.85 to S$1.80 due to higher risk-free rate. As valuations remain attractive and outlook is positive, we maintain BUY on Suntec REIT.

From UOB KH:
Kori Holdings (KHLL SP, 5VC) –
Technical BUY with +10.9% potential return
Last price: S$0.46
Resistance: S$0.51
Support: S$0.405

BUY with a target price of S$0.51 with tight stops placed
below S$0.435. The stock could continue to trend up
after making a higher low, and has closed above its mid
Bolllinger band. Its Stochastics indicator has also
formed a bullish crossover. Watch to see if prices could
break above its all-time high of S$0.475. Our retail
research has a fundamental BUY with a target price of

Courts Asia (COURTS SP, RE2) –
Technical BUY with +12.8% potential return
Last price: S$0.78
Resistance: S$0.88
Support: S$0.76

BUY with a target price of S$0.88 with tight stops placed
below S$0.755. The stock may continue its rebound
after prices rebounded from its lower Bollinger band,
and may move towards its middle Bollinger band. Its
RSI indicator has also rebounded from a reading of 20,
with its MACD histogram turning up. Watch to see if
prices could break above S$0.80. Our retail research
has a fundamental BUY with a target price of S$1.14.

Ezion Holdings- Channel check: Key takeaways from company visit.(EZI SP/BUY/S$2.37/Target: S$2.85)
FY13F PE (x): 11.3
FY14F PE (x): 8.7

Competition is still not in sight. Ezion continues to be the only player in the
liftboat market in Asia. Its fleet of liftboats and service rigs has increased to
27 units from 17 a year ago. Ytd, Ezion has won seven new charter
contracts. Given the high ROE of these projects, it is a surprise that thus
far, competition to Ezion has still not emerged. Management gave its
rationale: Liftboats operating in Asia are niche assets as their designs have
been modified from the original American designs. For competition to
emerge, Ezion’s competitors would need to offer designs that are suitable
for Asian waters. For asset investors who are non-oil & gas specialists,
they may not have adequate knowledge of Asian offshore oil & gas market
- and hence the confidence - to invest in these niche assets.
Maintain BUY. Our target price of S$2.85 is pegged at 11x 2014F
fullydiluted EPS (adjusted for dividends on perpetual securities and
preference shares). This is 15% above the long-term 1-year forward PE
mean of 9.5x for the offshore support vessel-owner segment of the
offshore & marine sector.

From DBS:
Silverlake Axis reported FY13 (Jun YE) profit of RM196m,
2% ahead of our estimate due to slightly better gross
margins coming in at 63.7%. Revenue of RM399m, flat yo-
y, was inline. Gross margins improved significantly due
to lower hardware sales and rise in software licensing and
maintenance revenue. Better than expected dividends
with payout ratio of ~80%. Proposed final dividend of
Singapore 1.1 Scts, resulting in total FY13 DPS of 3.1 Scts,
up 63% y-o-y, exceeded our 2.6S Scts forecast. The stock
is trading at FY13 dividend of 4.1% now. We will provide
more updates post discussion with management.

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