Local Brokerages Stock Call 16 May 2013

From OCBC:
SingTel: Upside fairly limited; downgrade to HOLD

Summary: SingTel saw its 4QFY13 revenue slipping 6% YoY and 3% QoQ to S$4.48b, weighed down by the weaker A$. Full-year revenue fell 3% to S$18.18b, and was 3% shy of our forecast. 4Q core earnings slipped 2% YoY and rose 15% QoQ to S$1.0b. Core FY13 earnings eased 1.8% to S$3.61b, or about 4% below our forecast. SingTel has declared a final dividend of S$0.10/share, bringing the full-year payout to S$0.168 (74% of underlying net profit). Going forward, SingTel expects group consolidated revenue to remain stable, and EBITDA to see low single-digit growth. It has guided for S$2.5b capex spending and a FCF of S$2b; it also raised its dividend payout ratio to 60-75% (from 55-70% previously). While we raise our SOTP fair value from S$3.68 to S$3.83 (after updating the value of its listed associates), further upside from here looks limited after the recent sharp run-up. Hence we downgrade our call from Buy to HOLD.

Petra Foods – 1Q13 results below expectations
Summary: Petra Foods’ 1Q13 results fell short of expectations as growth slowed relative to the previous quarters. Revenue grew 7.7% YoY to US$127.4m while margin improvement boosted gross and operating profit. Excluding losses from its to-be-divested Cocoa Ingredients business, which resulted in an overall net loss for Petra, core PATMI came in at US$14.1m (+20.0% YoY but -4.3% QoQ). Based on the results, we reduce our FY13 projections to reflect more achievable revenue growth targets and to account for a net loss in 2Q13 from sustained losses in the Cocoa Ingredients business. In terms of valuations, Petra is currently trading at more than 36x FY13F / 32x FY14F PE. In our view, this premium is too expensive at this juncture, and we expect some profit-taking on the likelihood of overall losses for 1H13. Maintain HOLD with an unchanged fair value of S$3.88.

Olam Int’l: HOLD – recalibration still needs time
Summary: Olam International Limited (Olam) saw 3QFY13 revenue climb 12% YoY (but decline 4% QoQ) to S$4.72b, such that its 9MFY13 revenue of S$14.31b (+20%) met 72% of our FY13 forecast. Reported net profit gained 10% YoY (but fell 30% QoQ) to S$108.5m, while core earnings (excluding bio-asset revaluation gains etc) rose 13% YoY (down 22% QoQ) to S$92.8m. Core 9MFY13 earnings of S$240.3m met about 79% of full-year forecast. Meanwhile, net gearing remains high at 2.2x as at end-Mar, unchanged from end-Dec; this after it further increased borrowings to S$9.3b from S$8.8b. But Olam intends to reduce its gearing boundary condition from < 2.5x to < 2.0x. Still, we could continue to see some overhang from its high net gearing. We also opt to keep our FY13 estimates unchanged. But our fair value improves from S$1.50 to S$1.73 as we push our valuations out from blended FY13/14F EPS to FY14F EPS. Maintain HOLD.

Midas Holdings: Adverse near-term conditions
Summary: Midas Holdings’ 1Q13 net loss attributable to shareholders of CNY4.9m (1Q12: PATMI of CNY15.3m) was larger than our forecast for a net loss of CNY3.2m. This was attributed largely to a wider-than-estimated share of loss of CNY4.0m from its associated company, NPRT. Looking ahead, we believe that strength of Midas’ recovery will depend heavily on the resumption of new high-speed railway (HSR) tenders. As the timeline of this is still uncertain, we believe that a more significant recovery in Midas’ financial performance would likely come in FY14, versus our previous FY13 expectations. Paring our FY13 revenue and PATMI estimates by 9.7% and 59.1%, respectively, and lowering our valuation peg from 1.2x to 1.1x FY13F P/B, we derive a fair value estimate of S$0.54 (previously S$0.595). But we maintain our BUY rating as we expect the eventual HSR tenders resumption and subsequent contract wins by Midas to provide a re-rating catalyst for the stock. 

SIA Engineering: FY13 within expectations
Summary: SIA Engineering Company's (SIAEC) FY13 results were in line with ours and the street's expectations. Revenue decreased 2.0% to S$1.15b, chiefly due to lower fleet management and project revenue. Operating profit fell 1.2% to S$128m. Share of profits from associated and JV companies increased 1.5% to S$159m, representing a contribution of 52.0% of the group's pre-tax profits. PATMI was up 0.4% to S$270m. Basic EPS of 24.51 S cents formed 98% of ours and the street's FY13 estimates. The board is recommending a final ordinary dividend of 15.0 S cents, which will bring total FY13 dividends to 22.0 S cents per share. Increasing our P/E peg from 17.1x to 20.0x and using an EPS forecast of 25.0 S cents for FY14F, we increase our fair value from S$4.38 to S$5.00 and maintain our HOLD rating on SIAEC.

CSE Global: Focus on margin stability
Summary: CSE Global reported 1Q13 results that were in-line with ours and the street’s estimates. 1Q revenue fell 10.9% YoY to S$120m on lower contribution from the Americas and EMEA (Europe, Middle East & Africa), while PATMI was flat at S$12.7m. After encountering issues in the Middle East in 2011 (cost overrun at two large telco projects) and the Americas in 2012 (lower-than-expected margins for onshore work), CSE Global now appears to be more keen on the higher margin brownfield projects, while carefully re-evaluating the lower-margin greenfield jobs. We now expect a slight contraction or modest growth in the top-line across FY13-14F and gross margins to stabilize around 30%. We have tweaked our model slightly and our FV declines to S$0.96 (previously S$0.99) on 10x FY13F PER. Maintain BUY. 

Ezion Holdings: Bond issue to fund new contract
Summary: Ezion Holdings (Ezion) announced that it has received a letter of intent with a contract value of about US$80.3m over a four-year period to provide a service rig for an Asian-based national oil company. The unit is expected to be deployed and working in SE Asian waters by end-2013 after refurbishment and conversion. Unlike previous projects, this project will be funded through a bond issue; the total project cost is US$60m (US$40m asset cost, US$20m refurbishment, conversion). Indeed, we understand that Ezion has launched S$110m of six-year bonds at 4.70%. We maintain our BUY rating on the stock but put our fair value estimate of S$2.50 under review. 

KS Energy: Recovery will take time
Summary: KS Energy (KSE) reported a 27.6% YoY rise in revenue to S$153.4m and a net profit of S$1.1m in 1Q13, vs a net loss of S$315k in 1Q12. However, the group’s operating profit went into the red again, after four previous quarters in the black. Though revenue and net profit accounted for about 24% and 26% of our full year estimates, respectively, we note that results were bumped up by gains arising from the sale of a jointly owned asset. Gross profit margin was lower at 23.3%, compared to 28.2% in 1Q12. Revenue from the distribution business grew 40.6% YoY to S$120.4m, mainly due to strong project related sales in SSH Corp and Aqua Terra. The drilling business, on the other hand, saw a 9.6% growth in revenue. Pending further details from management, we put our HOLD rating and fair value estimate of S$0.70 under review.

From UOB KH:

Ying Li International Real Estate- Results within
expectations; new strategy to be unveiled soon (YINGLI
SP/BUY/S$0.495/Target: S$0.64)
Maintain BUY but with a reduced target price of S$0.64, pegged
at a 23.5% discount to our RNAV of S$0.83/share. This is in
line with the average discount for Chinese developers under our
coverage.

Global Logistic Properties (GLP SP, MC0) -
Technical BUY with +11.1% potential return
Last price: S$2.88
Resistance: S$3.20
Support: S$2.67
Maintain BUY with a revised target price of S$3.20 with tight
stops placed below S$2.78. The stock is currently trending
above its rising 30-day moving average and could continue
its bullish momentum. Its MACD did not form a bearish
crossover in the last trading session and the RSI indicator has
turned up above a reading of 60. Watch to see if the stock
could continue to make new 52-week highs.

Neptune Orient Lines (NOL SP, N03) -
Technical BUY with +12.7% potential return
Last price: S$1.10
Resistance: S$1.24
Support: S$1.05
BUY with a target price of S$1.10 with tight stops placed
below S$1.075/1.05. The stock is trading near a potential
triple bottom created on 25 Jul 12, 25 Sep 12 and 21 Nov 12
and prices have moved away from its lower Bollinger band
with comparatively higher trading volume. Its MACD has
formed a bullish crossover earlier and is trending up, while its
Stochastics appears to be forming another bullish crossover.
Watch to see if the stock could break above its declining 200-
day moving average.

Cordlife Group (CLGL SP, P8A) -
Take profit from previous technical BUY
Last price: S$0.88
Resistance: S$0.92
Support: S$0.77
The stock was featured as a technical BUY when it opened at
S$0.555 on 17 Jan 13. Prices did not fall below the stop-loss
level of S$0.535 and have since returned 58.5% on closing
prices, with an intraday high of S$0.89 in the last trading
session which exceeded the initial target of S$0.64. Some
profits could be taken off the table should the stock fail to
move above S$0.92. Its 21-day Stochastics is suggesting
that the stock is overbought.
Our institutional research has a fundamental HOLD with a
target price of S$0.65.

Olam International- 3QFY13: Results are within expectation. 4QFY13 numbers likely to be weaker on lower sales volume and net contribution/mt.
(OLAM SP/BUY/S$1.81/Target: S$2.00)
FY13F PE(x): 16.7
FY14F PE(x): 12.9
Within expectation. Olam reported a net profit of S$113.5m (+15% yoy, -26% qoq) for 3QFY13 and S$311m (+19% yoy) in 9MFY13. Profit was lower on a qoq basis due mainly to non-operating items. At EBITDA level, 3QFY13 was relatively flat as lower
qoq sales volume was compensated by better net contribution/mt. 9MFY13 strong profit growth was partly due to the gain from sales of US almond orchard, gain on bond buyback, losses from termination of sugar projects and net of tax pertaining to the sale
of almond orchard land.
Maintain BUY with a new target price of S$2.00 (previous: S$1.98) pegging FY14F EPS to 30% discount to Olam’s long-term forward PE of 16.1x (or equivalent to 1SD below long-term mean PE).

SATS- 4QFY13: Admirable 13.8% rise in core net profit.
(SATS SP/HOLD/S$3.22/Target: S$3.40)
FY14F PE(x): 17.5
FY15F PE(x): 16.8
Lower depreciation costs, a recovery from TFK and higher associate income lift core profit 32.4%. Headline 4QFY13 net profits declined 7.8% yoy due to a S$16.8m impairment charge relating to a deferred consideration arising from the sale of Daniels
Group two years ago. However, the 13.8% core net profit growth was admirable. Final dividend of 10 S cents (4 S cents special) amounted to a total payout of 90%.
Maintain HOLD but we raise target price from S$3.20 to S$3.40. We continue to value SATS based on a dividend discount model (required return: 7.1%, terminal growth 1.5%). At our fair value, the stock will offer a dividend yield of 4.7%.

SIA Engineering- 4QFY13: Two consecutive quarters of top-line decline. No immediate catalyst. Downgrade to HOLD.
(SIE SP/HOLD/S$5.06/Target: S$5.20)
FY13F PE(x): 19.9
FY14F PE(x): 18.9
Results slightly weaker than expected. Net profit came in 2.5% below consensus and 3.6% below ours. Revenue declined yoy but a slight improvement in operating margin and better associate income led to flat net profit. There was no change in its final dividend of 15 cents. Payout ratio increased from 86% to 90%. Operating cash flow was flat yoy but free cash flow (FCF) rose 5% yoy.
Downgrade to HOLD. We lower our target price by 7.2% to S$5.20 after lowering our FY14 and FY15 earnings estimates. We continue to value SIAEC on a DDM basis (COE 6.2%, terminal growth 1%). At our target price, the stock offers a dividend yield of 4.4%. Entry price is S$4.70.

S’pore Telecommunications- 4QFY13: Earnings decline on a yoy basis. Maintain SELL.  (ST SP/SELL/S$3.99/Target: S$3.54)
FY14F PE(x): 17.9
FY15F PE(x): 16.5
Singapore Telecommunications (SingTel) reported a net profit of S$868m (-32.6% yoy) for 4QFY13, below our expectation of S$913m. It completed the divestment of its 30% stake in Warid Pakistan, resulting in an exceptional loss of S$225m. Underlying net profit would have declined 2.2% yoy if we exclude all exceptional items.
Maintain SELL. Our valuation for SingTel is S$3.54 based on sum-of the- parts (SOTP) methodology. We have fine-tuned our SOTP valuation to utilise our target prices of Bt272 for AIS and Rp13,050 for Telkom, which are under our coverage.

Swiber Holdings- 1Q13: Trading at a deep discount to our RNAV.
(SWIB SP/BUY/S$0.69/Target: S$0.86)
FY13F PE(x): 5.8
FY14F PE(x): 4.8
Ahead of expectations. Swiber reported a net profit of US$20.1m (+132% yoy) for 1Q13. This was 36% of our 2013 forecast of US$56m. We attribute the higher-than-expected earnings to: a) faster-thanexpected orderbook recognition (1Q13 turnover was 27% of our 2013 forecast of US$1,137b), b) strong associates' earnings contributions, and c) lower-than-expected tax and minority interests.
Maintain BUY and target price of S$0.86, based on 6.2x 2014F fully diluted EPS. We peg Swiber’s valuation at a 35% discount to the long term PE mean of 9.6x (since 2004) of the offshore support vessel (OSV) owner segment of the offshore & marine sector.
We believe as Swiber ramps up its earnings, it will gain investor confidence as a good play on rising regional offshore exploration and production spending.

From DBS:

Ezion has signed a LOI to provide time charter for a service
rig, worth US$80.3m over 4 years. The rig is expected to
be delivered to a national oil company in SEA by end of
2013. Capex will be funded solely by a 6-year bond
issuance at c.5%. FY14F earnings were lifted by 4%.
Maintain BUY with higher TP of S$2.52 (Prev S$ 2.47).

China Merchant Holdings announced that its deal to
acquire Jiurui Expressway in exchange for its New Zealand
property business as well as cash and new shares has
been called off, mainly due to the failure to obtain
approvals from the New Zealand authorities to transfer its
property business to the sellers of Jiurui Expressway. As
such, our fully diluted EPS forecasts for FY13 and FY14 are
lifted (as Jiurui E'way was not initially expected to be very
profitable and dilution now does not take place) by
10.4% and 12.5% respectively to S 9.2cts and S 10.5cts
but our TP is reduced (reflecting the long term value that
Jiurui E'way would have brought) to S$1.07 from S$1.12.
Maintain BUY.

SingTel’s 4Q13 underlying profit of S$1001m (-2% y-o-y)
was in line with consensus but slightly below ours. We
were surprised with higher payout ratio of 60-75% (from
55-70%). At 75% payout ratio, dividend yield would be
4.5% in FY14F. Guidance from management is for stable
FY14F EBIT (excluding associates), 5% below market
forecasts. Maintain HOLD with revised TP of S$3.80 (Prev
S$ 3.40), after revising our valuation for Telkomsel and
Globe in line with higher market prices. SingTel is trading
at +2 S.D. above historical mean of 13.3x.

FY13 results for SATS were within expectations. A final
and special DPS of 10 Scts was declared. This will bring
FY13 DPS to 15 Scts, equating to a payout of 90% and
dividend yield of 4.7%. Maintain HOLD with higher TP of
S$3.29 (Prev S$ 2.80). SATS has performed well and is
now trading at 17.2x on FY14F PE, +1 std dev above
historical mean, and presents limited upside to our TP.

Banyan Tree Holdings reported a strong set of 1Q13
results, with earnings rising 19% to S$14m. Outlook for
hotels and property sales continue on an upward
momentum. Forward bookings for hotels improving while
new property launches in Phuket are selling like hot
cakes. Given its asset heavy balance sheet, we believe that
setting up a REIT (probably from its Thailand properties,
coupled with properties from its Indochina and China
Funds) can result in the group crystalizing significant value
in its balance sheet. Maintain BUY and TP S$0.83.

3Q-FY13 core earnings for Jaya Holdings were below. The
usually weak season (monsoons in SE Asia) was
exacerbated by changes in cabotage laws in Indonesia,
which limited the ability of the group’s fleet to participate
in Indonesian tenders. Utilisation has since recovered and
outlook for charter rates for the group’s OSV fleet
remains generally upbeat. However, FY13/14F earnings
cut by 5/8% on weaker 3Q and some revenue deferment
due to delays in vessel completions. The recovery story for
Jaya is intact; maintain BUY with S$0.85 TP.

1Q13 earnings for Yongnam were slightly below but on
track to meet our full year expectations. We expect back
end loaded earnings as Thomson Line commences
construction in 2H13. Maintain HOLD, TP S$0.33 (Prev S$
0.25). Yongnam is bidding for two airport projects in
Myanmar (Yangon International Airport and the
Hanthawaddy International Airport).

From Maybank KE:
Yongnam Holdings: Positioning Ahead of Contract Wins; Buy TP $0.43
YNH SP | Mkt Cap USD334.9m | ADTV USD2.9m
Reiterate  BUY  ahead  of  2H13. Our TP of SGD0.43 is pegged to 10x
FY13F.
1Q13 results were largely within expectation. Revenue grew 22% yoy.
Profit  was flat yoy, but this was in comparison to exceptional margins
in the same quarter last year.
We  expect  margins  to pick up on execution of strutting orderbook
which  has  higher  margins  and the commencement of new contract wins.
Management  is  gunning  for  several  contracts  in  2H13  which  will
replenish orderbook substantially.
 
 Sino Grandness: Watch Out For The Next Step; Buy TP $1.60
 SFGI SP | Mkt Cap USD337.1m | ADTV USD2.3m
Maintain BUY and TP of SGD1.60. Sino Grandness’s 1QFY13 results were
within  market  expectation  but  we  expect  2Q  and  3Q results to be
stronger. BUY maintained.
Garden Fresh continued to drive the growth with revenue up 50% yoy.
It seems RMB250m net profit target for Garden Fresh is on track.
We  maintain  our  BUY call and target price for the time being but
watch  out  for  the  further  step towards the Garden Fresh IPO, which
could significantly re-rate the stock.
 
Swiber Holdings: Strong Start to the Year; Buy TP $0.84
SWIB SP | Mkt Cap USD338.1m | ADTV USD1.1m
Maintain  BUY with TP of SGD0.84. A very strong set of 1Q13 results
following a record year in FY12, supports our upbeat view on Swiber.
Ø  1Q13 PATMI of USD20.1m was above expectations and make up 43% of our
previous  FY13F  forecast.  Contract  win is our main concern now given
that its last announced contract win was in Feb-13.
Swiber  is tendering for close to USD2b of contracts. Contract wins
plus  execution  is critical for Swiber in order to benefit from better
utilisation of its vessels. This would support a positive re-rating for
the stock and relieve balance sheet concerns.
 
SingTel: The Heavy Lifting Begins; Sell TP $3.38
ST SP | Mkt Cap USD51.0b | ADTV USD59.6m
SingTel is a SELL with a target price of SGD3.38 as the easy “hype”
phase  is  over  now that the stock has gained 30% in a year. M1 is our
top pick among Singapore telcos.
Even as it prepares to pour in more billions into loss-making, very
long-term  investments  with  no  hope for positive short-term returns,
capex  is expected to rise 25% and free cashflow is expected to drop by
a  third,  it  is on the eve of having to spend even more money that is
beyond  its  current  guidance  - if it wins one of two Myanmar telecom
licences (deadline 27 June 2013).
FY13  underlying  net  profit  of SGD3,611m was within expectations
mainly  because  of  strong contributions from Telkomsel and Globe that
offset continued poor results from Bharti Airtel.
  
Olam International: Work In Progress; Sell $1.55
OLAM SP | Mkt Cap USD3.5b | ADTV USD11.0m
Maintain  SELL  with  TP of SGD1.55, pegged to 13x FY13F. with 3Q13
results  were  within  expectations,  though  higher  than  ours,  with
recurring net profit coming in at SGD121.5m.
This  is  healthy  yoy  growth,  but it is worth noting that it was
driven  mainly by the Food Staples & Packaged Foods segment, where Olam
was able to profit from exceptional margins for rice in Nigeria.
We  think  time  will  be  needed for any restoration of its equity
premium.  Progress  will have to be made in the coming quarters for its
recent strategic review plans.
 
United Engineers: Hit by start-up expenses; Buy TP $4.05
UEM SP | Mkt Cap USD725.5m | ADTV USD0.9m
Maintain BUY with TP of SGD4.05/share, 25% discount to RNAV.
1Q13  results  were  slightly below our expectations, but largely a
misnomer  given UE’s ongoing plans to takeover WBL. With the recent WBL
saga  between  Straits  Trading  and UE drawing to a close, we think UE
will  experience  short  term  share price weakness via paying over 12%
higher than their original price for WBL
1Q  was  hit  by  higher staff and operating costs arising from the
commencement  of  UE Bizhub East and Park Avenue Changi. Revenue was at
SGD136.6m  (17%  YoY,  -25%  QoQ), and net profit at SGD7.4m (-24% YoY,
  -82% QoQ).
 
Midas Holdings: On The Way To Recovery; Buy TP $0.75
MIDAS SP | Mkt Cap USD464.3m | ADTV USD3.3m
Maintain  BUY and TP of SGD0.75. Midas reported a net loss of RMB5m
for  1QFY13.  But our investment theme for Midas remains to be a bet on
improving order flow in 2013 and a turnaround in earnings in 2014.
Management’s contract outlook implies further RMB500-600m order win
for  the  rest of the year on the top of current RMB650m order book. We
are  also  optimistic  on  the likelihood of potential high speed train
tender this year.
We  recommend the investors to be patient for the new order wins as
the current 1x PB provides a floor for the share price. 

 

Local Brokerages Stock Call 15 May 2013

From OCBC:
Neptune Orient Lines – Looking at the positives
Summary: Neptune Orient Lines's (NOL) 1Q13 results disappointed with a larger-than-expected core operating loss. Nonetheless, the figures marked a vast improvement over the same period a year ago. Revenue stayed relatively flat at US$2.37b (-0.3% YoY) and core operating losses narrowed to -US$85.2m from -US$233m a year ago following the success of the cost cutting initiatives implemented last year. Entering 2Q13, NOL could experience further downward pressure on freight rates although we remain hopeful that a combination of positive macro-data, collective industry action and lower bunker fuel costs will push NOL towards a more positive showing by 3Q13. We maintain our view for a modest recovery in FY13 for the liner and keep our BUYrating with an unchanged fair value estimate of S$1.38. 

SingTel: FY13 results just about in line

Summary: SingTel posted its 4QFY13 results this morning, with revenue slipping 6% YoY and 3% QoQ to S$4.48b, weighed down by the weaker A$. Full-year revenue fell 3% to S$18.18b, and was 3% shy of our forecast. Reported net profit for 4Q came in at S$868.2m, down 33% YoY but up 5% QoQ; core earnings slipped 2% YoY and rose 15% QoQ to S$1.0b. Core FY13 earnings eased 1.8% to S$3.61b, and was about 4% below our forecast. SingTel has declared a final dividend of S$0.10/share, bringing the full-year payout to S$0.168 (74% of underlying net profit). For FY14, SingTel expects to consolidated revenue to remain stable, while EBITDA should continue to see low single-digit growth. It also expects to spend some S$2.5b in capex, with free cashflow coming in at around S$2b. Last but not least, it has revised up its dividend payout ratio from 55-70% to 60-75%. We will have more after the analyst teleconference later. Meanwhile, we place our Buy rating and S$3.68 fair value under review. 

 

Olam Int’l: Decent 3QFY13 results
Summary: Olam International Limited (Olam) saw 3QFY13 revenue climb 12% YoY (but down 4% QoQ) to S$4.72b, such that its 9MFY13 revenue of S$14.31b (+20%) met 72% of our FY13 forecast. Reported net profit gained 10% YoY (but fell 30% QoQ) to S$108.5m, while core earnings (excluding bio-asset revaluation gains etc) rose 13% YoY (down 22% QoQ) to S$92.8m. Core 9MFY13 earnings of S$240.3m met about 79% of full-year forecast. We will have more after the analyst briefing later. Until then, our Hold rating and S$1.50 fair value is under review.

Noble Group Ltd: Weak FY13 start but recovery expected
Summary: Noble Group (Noble) reported a 1.1% YoY QoQ decline in revenue to US$22.6b, meeting 22.5% of our full-year forecast, but reported net profit tumbled 62.5% to US$41.3m, or about only 10.2% of our original FY13 forecast, weighed by losses at its Agriculture segment. Its Metals, Minerals and Ores (MMO) also did not fare too well. The only bright spark came from its Energy segment, with operating income up 6% at US$368.0m, although tonnage (Excluding gas and power volume) was flat. Noble intends to continue with its asset light strategy and also intends to focus on improving its efficiency and lowering cost amid a still-challenging environment. Still, we are cutting our FY13F earnings by 10% (FY14F by 13%), which in turn eases our fair value from S$1.19 to S$1.09. Maintain HOLD. 

ComfortDelGro - Decent start to the year
Summary: ComfortDelGro’s 1Q13 results saw revenue increasing slightly by 1.8% YoY to S$870.8m on the back of broad–based growth across its segments while operating profit improved 2.8% to S$95.9m as higher staff and repairs and maintenance expenses were offset by a reduction in fuel and electricity expenditure. As a result, PATMI rose 7.9% to S$57.7m. In the coming quarters, we expect a fare increase to be implemented by the government in FY13, and the group should to continue benefiting from lower fuel costs due to the favourable fuel outlook and proactive hedges in place, which should offset sustained weakness in the SG bus business. While we continue to prefer ComfortDelgro over SMRT, we maintain our HOLD rating with an unchanged fair value estimate of S$1.95 in light of its recent ~8% appreciation. 

Midas Holdings: 1Q13 net loss wider than expected
Summary: In line with its profit guidance issued on 10 May, Midas Holdings reported a net loss attributable to shareholders of CNY4.9m in 1Q13, versus PATMI of CNY15.3m in 1Q12. Revenue fell 12.1% YoY to CNY202.4m. While we had expected Midas to report a loss-making quarter, the magnitude was larger than our forecast for a net loss of CNY3.2m. However, revenue was within our CNY199.8m estimate. The below-expectations bottomline performance was due partially to weaker-than-estimated gross margin and largely attributed to a wider share of loss of CNY4.0m from its associated company, Nanjing SR Puzhen Rail Transport (OIR forecast: share of loss of CNY0.8m). On an operational basis, Midas was actually profitable, although profit from operations dipped 50.4% YoY to CNY18.9m. We will provide more updates after the analyst conference call. For now we have a BUY rating on Midas. However, our forecasts, 1.2x P/B target peg and S$0.595 fair value estimate are likely to be lowered given the ongoing uncertainty over the timeline of resumption of new high-speed train car orders. 

 
SATS Ltd – FY13 results in-line
Summary: SATS’s FY13 results were in line with our expectations, coming in within 2% of our projections. Revenue grew 7.9% YoY to S$1,819m on the back of increases from the gateway and food businesses while operating profit increased correspondingly by 13.8% YoY to S$192.3m. Despite cost pressures related to higher staff expenses and raw material costs, SATS was able to register an improvement of 0.6ppt in operating margin to 10.6% from a year ago. FY13 PATMI was S$184.8m (+2.1% YoY). Management declared a final and special cash dividend of 6 S cents and 4 S cents, respectively, to bring the total dividends declared in FY13 to 15 S cents (FY12 total: 26 S cents), representing a payout ratio of 90.3% of PATMI. As SATS’s share price has continued to appreciate in the previous weeks, we feel that many of the positives have already been priced in. Nonetheless, pending the analyst briefing later this morning, we place our HOLD rating and fair value under review. 

 
SIA Engineering: FY13 within expectations
Summary: SIA Engineering Company's (SIAEC) FY13 results were in line with ours and the street's expectations. Revenue decreased by 2.0% to S$1.15b, chiefly due to lower fleet management and project revenue. Operating profit fell 1.2% to S$128m. Share of profits from associated and JV companies increased by 1.5% to S$159m, representing a contribution of 52.0% of the group's pre-tax profits. PATMI was up 0.4% to S$270m. Basic EPS of 24.51 S cents formed 98% of ours and the street's FY13 estimates. The board is recommending a final ordinary dividend of 15.0 S cents, which will bring total FY13 dividends to 22.0 S cents per share. Pending a briefing with management, we are maintaining our HOLD rating but place our fair value estimate of S$4.38 under review.

Swiber Holdings: Good 1Q13 results
Summary: Swiber Holdings (Swiber) reported a 59.3% YoY rise in revenue to US$309.7m and a significant rise in net profit from US$8.6m in 1Q12 to US$20.1m in 1Q13. Both revenue and pre-tax profit formed 27% of our full-year estimates, in line with our expectations, but the lower-than-expected tax rate meant that net profit accounted for 38% of our full-year forecast. Gross profit margin was lower at 16.1% in 1Q13 vs 19.8% in 1Q12. Swiber’s order book stands at about US$1.1b as at May. Net gearing increased slightly from 0.95x in 4Q12 to 1.0x in 1Q13. Pending an analysts’ briefing later in the afternoon, we put our hold rating and fair value estimate of S$0.70 under review. 

CSE Global: 1Q13 net profit within expectations
Summary: CSE Global’s 1Q13 net profit was flat at S$12.7m, forming about 24% of our full-year estimates and 23% of the street’s. Revenue declined 11% to S$120m due to lower contribution from the Americas and the EMEA region. However, net margin improved to 10.5% (1Q12: 9.4%) as it undertook higher margin work in the Americas and the loss-making projects are nearing completion. CSE’s order-book declined to S$361.1m as at end-1Q13 (end-4Q12: 384.5m). Pending an analyst briefing later, we keep our BUYrating (FV: S$0.99) unchanged.

CWT Ltd: Commodity SCM expansion underway
Summary: CWT’s 1Q13 revenue increased by 39% YoY to S$1.5b, largely due to growth from its newly established Commodity SCM business. However, net profit was flat at S$27m as the start-up costs offset any incremental earnings for the new business segment. Nonetheless, the results were within our expectations. CWT’s balance sheet also appeared to be stable with net gearing of 0.48x as at end-Mar 2013. We currently have a BUYrating on CWT with a FV estimate of S$2.08, and will provide further updates after our call with management.

Dyna-Mac Holdings: Stay cautious
Summary: Dyna-Mac Holdings reported revenue of S$60m (+155% YoY) and net profit of S$6.7m (+101% YoY) for 1Q13. However, gross profit margin declined to 24.4% from 28.8% in the year-ago period due to fewer variation orders during the quarter. Its order-book fell to S$113m (as at 14 May 2013) from S$134m (as at 27 Feb 2013), providing cover for only two quarters. This makes it vulnerable to any delays in the award of new contracts. We keep our HOLD rating for now and will review our S$0.50 fair value after our discussions with management. 

 
UE E&C: Construction pace expected to pick up
Summary: UE E&C reported a 43% YoY increase in revenue to S$87.6m and a 14% YoY increase in net profit of S$4.8m in 1Q13. The improvements were mainly due to larger contribution from existing projects. However, 1Q gross profit margin fell to 10.8% from 15.4% in the year-ago quarter as some of the projects were still in preparatory stages. We expect the construction pace to pick up in 2H13. Pending our discussions with management, we keep our BUY rating and S$0.82 fair value unchanged. 

VARD Holdings: Earnings recovery in FY14
Summary: VARD Holdings’ 1Q revenue and net profit declined by 2% and 30% YoY to NOK2.7b and NOK188m respectively, largely due to (i) the completion of several high-margin jobs last year, and (ii) operational challenges in the Niteroi yard in Brazil. Although 1Q results were slightly lower than ours and consensus estimates, we now see positive developments that we believe would herald an earnings recovery in FY14F. Firstly, management is now more positive on Brazil and expects operations to stabilize by year-end. Secondly, order-book is at a very healthy level and management is optimistic on securing new contracts. Thirdly, management is now able to commit to longer-term investment with Fincantieri coming onboard as a controlling shareholder. Maintain BUY with unchanged S$1.52 fair value estimate. 

From UOB KH:

Hafary Holdings Limited- Triple Boosters For This
Undervalued Gem (HAFA SP/BU/S$0.25/ Target:
S$0.33)
Triple boosters. Since early April, Hafary Holdings (Hafary)
has enjoyed three strong catalysts including: a) a second
interim dividend of 1.5 S cents/share (post-split), b) a transfer
to SGX Mainboard from Catalist, and c) 2-for-1 share split.

ComfortDelGro Corporation- 1Q13: Stellar results highlight earnings resilience; upgrade to BUY.
(CD SP/BUY/S$2.06/Target: S$2.32)
FY13F PE(x): 16.9
FY14F PE(x): 16.0
Stellar results. ComfortDelGro Corporation (CD) reported a net profit of S$57.7m (+7.9 % yoy) for 1Q13, accounting for 23% of our full-year profit forecast. In 2012, 1Q profits contributed 21% of full-year earnings.
Upgrade to BUY with DCF-derived (cost of equity: 6.5% terminal growth: 2%) target price of S$2.32 (previously S$1.92). We have raised our target price based on our higher earnings estimate, and lowered our capex forecast to S$500m per year from
S$520m-550m previously.

First Resources- 1Q13: Net profit of US$62.6m (+29.9% yoy, +34.4% qoq), above
expectation. The most remarkable set of results among peers.
(FR SP/BUY/S$1.87/Target: S$2.35)
FY13F PE(x): 13.6
FY14F PE(x): 10.9
Results above expectation. First Resources (FR) reported an impressive set of results with net profit for 1Q13 up 29.9% yoy and 34.4% qoq to US$63.6m.
Maintain BUY and target price of S$2.35, based on 14x 2014F PE, at mid-cycle valuation. We like FR for its hands-on management team, young age profile and efficiency.

Neptune Orient Lines- 1Q13: Gain from sale of building leads to an expected turnaround.
(NOL SP/BUY/S$1.09/Target: S$1.40)
FY13F PE(x): 8.3
FY14F PE(x): 9.1
Neptune Orient Lines (NOL) reported revenue of US$2,371m (+4% yoy) in 1Q13. It turned around from a 1Q12 loss with a net
profit of US$76m, thanks to a US$203m gain from the disposal of NOL Building. The core losses were quite close to CSCL’s and in
line with our expectation.
Maintain BUY but cut our target price to S$1.40, based on 1.2x 2013F P/B. As a premium TP carrier with more than 95% exposure
to TP contractual cargo, NOL is a major beneficiary of the potential TP contractual rate hike. In addition, rates and valuations have
bottomed out simultaneously, creating buying opportunities.

Noble Group- 1Q13: Continued weak agriculture margins led to a 62% yoy fall in net profit to S$41m. We see
consensus earnings downgrades as a catalyst.
(NOBL SP/SELL/S$1.115/Target: S$0.92)
FY13F PE(x): 15.8
FY14F PE(x): 13.0
Disappointing 1Q13. Noble Group’s (Noble) 1Q13 net profit of US$41.3m was substantially below our and consensus forecasts.
Although group tonnage for the various segments was flat at 52.7m tonnes (-0.6% yoy), operating income from supply chain was dragged by a US$66.6m loss in its agriculture division. On a more positive note, the group executed well on its plans to manage
finance and sales, administration and operating expenses (SAO) by cutting these two costs by 13% yoy and 19% yoy respectively.
SELL; consensus downgrades coming. Maintain SELL with a lower target price of S$0.92 (previously S$1.17), based on a 30% discount to its long-term mean PE of 15.3x. 

From DBS:

Core loss of US$121m for Neptune Orient Lines exceeds
expectations. Rate increases is hard to push through as
liners fail to maintain capacity discipline. Recovery
timeframe is pushed back; normalized returns look
unlikely for NOL before FY15. We cut our earnings
estimates for FY13/14 by 107%/70%, in line with more
bearish volume and freight rate expectations hereon.
Downgrade to HOLD with lower TP of S$1.19 (Prev S$
1.45).

1Q13 results for Noble Group below as agriculture
segment swung into the red. This division was hammered
by idled Argentina soybean plants, logistic congestion in
Brazil and weak sugar prices. We expect sequential
improvement in the absence of one-off negatives but the
sugar business may continue to face challenges from low
sugar prices. We have cut our FY13/14F earnings by
12%/9%. Downgrade to HOLD with TP cut to S$1.00
(Prev S$ 1.45). We believe Noble’s share price will come
under pressure post the disappointing results, earnings
downgrades and slow macro recovery.

SingTel’s 4Q13 underlying profit of S$1,001m (-2.2%
yoy) was 5% below ours and consensus estimate of
S$1,050m due to weak Singapore and regional
associates. Singapore’s underlying profit declined 5% yoy
to S$282m due to S$41m loss from new digital business
(versus S$13m loss in 3Q13). Associate’s underlying
profit contribution of S$387m was up 5% yoy but below
our expectations of S$420m due to currency translation
losses as Indian Rupee and Indonesia Rupiah declined
11% and 9% yoy respectively. Telkomosel, AIS and Globe
offset Bharti’s weakness. Management guided for stable
group revenue with low-single digit growth in EBITDA led
by cost cutting. However, it guided for stable EBIT
(excluding associates) due to higher depreciation and
amortisation. We will be reviewing our estimates and TP
but are likely to maintain HOLD call.

1Q13 results for ComfortDelgro within expectations. Net
profit up 7.9% y-o-y; EBIT margins expand on lower
fuel/energy costs. We expect re-rating to continue given
its stable profile, predictable earnings stream, diversified
geographical exposure and strong balance sheet.
Maintain BUY, TP raised to S$2.19 (Prev S$ 2.05) as we
roll our valuations to FY14, from a blended FY13F/14F.

First Resources’ 1Q13 earnings of US$63.6m (+30%y-o-y;
-13% q-o-q) were ahead of expectations. Key difference:
implied CPO ASP booked was 35% higher than average
spot prices (net of export taxes). FY13F/14F/15F earnings
were tweaked by +4%/-4%/-3% on changes in CPO ASP,
FFB yields, and olein volume assumptions. BUY call
reiterated for 15% upside to S$2.14 (Prev S$ 2.16) TP.

Midas reported a small loss in 1Q of Rmb 4.9m vs. profit
of Rmb 15.2m last year due to lack of contract wins in the
last 18 months. We expect a turnaround in 2H13 as the
group’s order book has now grown to c. Rmb800m from
just Rmb400m in January. The magnitude of turnaround

for Midas would depend on the timing of the high speed
rail contracts. Maintain BUY with S$0.60 TP based on
1.2x P/BV.

FY13 results for SIA Engineering were slightly below
estimates on lower revenues from fleet management and
lack of special projects. We are scaling back FY14/15F
earnings by 2/3% to account for the slower growth
trajectory. Final DPS of 15Scts was declared, in line with
our estimates, and implies total payout of 22Scts for FY13
(FY12: 21Scts). There is little room for further
outperformance, maintain HOLD with a TP of S$4.80.

Thai Beverage’s 1Q13’s net profit fall was within
expectations. The net profit drop was impacted by net
loss from F&N’s operating results. Spirits volume is
recovering from higher inventory carried by trade; we
expect sequential improvement. Maintain BUY, TP:
S$0.80.

1Q13 core earnings for Vard saw a 25% sequential
improvement but EBITDA margins still at low levels – in
line. Outlook for subsea remains robust and there are also
signs of improvement seen for AHTS market. The
operating issues in Brazil should be largely resolved by
end-FY13; we expect EBITDA margins to improve next
year. Maintain BUY; TP revised down to S$1.46 (Prev S$
1.57) as we trim FY13/14F earnings by 4/6%.

1Q13 net profit of S$12.7m for CSE Global, up 4% yoy,
was inline and account for 23.1% of our full year
estimates. Revenue declined 11% yoy due to lower
onshore activity in North America and lower zero-margin
revenue in Middle East and project delays. However gross
margin improved to 31.5% versus 27.9% in 1Q12 due to
higher margin offshore projects and lower zero-margin
revenue. New order wins stood at S$95m, up 11% yoy,
below expectations and only account for 17.2% of our
full year estimate. We have a HOLD rating with TP of
S$0.85. More updates after discussion with the
management.

From Maybank KE:
Noble Group: Agri Problems Persist; Cut to Hold, TP $1.17
NOBL SP | Mkt Cap USD5.9b | ADTV USD18.3m
1Q13 results were significantly below market expectations, as problems
in  its  agricultural  segment  persist. Recurring net profit was down 55%
yoy, hurt by a maiden loss in its agri segment.
We had earlier been positive on its new asset-lighter strategy and the
 benefits  of that in terms of lower overhead cost and strong balance sheet
 remains  evident.  However,  poor  earnings level and visibility will be a
 near-term drag on stock price.
We  cut our earnings by 18-26%, and our new TP of SGD1.17 is pegged
to  13x  FY13F.  We  would recommend entry around SGD1.00, where 1x P/B
provides strong support.
  
First Resources: Boosted By High CPO ASP, Sales Volume; Buy, TP $2.06
FR SP | Mkt Cap USD2.3b | ADTV USD3.2m
FR’s  1Q13 core net profit of USD64m (+34% QoQ, +30% YoY) was ahead of
expectations, at 36% of our forecast and 31% of consensus. 1Q results were
lifted  by higher CPO ASP achieved on forward sales locked-in in 2012, and
the drawdown of inventories to boost sales volume.
1Q  is  a  disproportionate  36%  of our full year forecast but we are
 maintaining  our full year forecast as 1Q was boosted by factors that will
 not be repeated.
 Still,  we  like  FR  for  its  long-term value proposition, strong
 management,  and  low  production cost. Maintain BUY with TP of SGD2.06
 (+11% upside) on 13x FY14 PER.
 
Vard Holdings: Looking More Attractive; Buy, TP $1.65
VARD SP | Mkt Cap USD1.0b | ADTV USD7.1m
Recent   sell-down   is   unwarranted   and   we   believe   that
stronger-than-expected  order  intake  this  year  would drive positive
re-rating. Reiterate Buy, TP SGD1.65.
1Q13  net  profit  of  NOK188m  (-30% YoY, +52% QoQ) was within our
expectations  but  below  consensus.  We  point  out  that current year
earnings  is  a  repercussion  of  past  event  which  should have been
anticipated.
We  think that order win this year could surprise on the upside and
high  cost  issues  in  Brazil  yard should be resolved by end-2013. At
7.2x/5.6x FY13F/14F PER, valuation is undeservingly low.
 
Biosensors International: More Acquisitions On The Way; Hold, TP $1.28
BIG SP | Mkt Cap USD1.7b | ADTV USD3.1m
Biosensors  is acquiring the assets of Spectrum Dynamics (SD) for cash
consideration  of  USD51.13m  (7x  P/B).  This  marks  the  first  of more
acquisitions to come as Biosensors seeks to expand its product offerings.
Given  that  there  would not be any near-term contributions from this
acquisition,  we believe that the market reaction would be neutral. Growth
expectations  need  to  be  tempered  with  execution risks in the initial
stages.
We  have  not  accounted  for  any  potential  contributions in our
forecasts and valuations. Maintain Hold and SOTP-based TP of SGD1.28.
  
CWT: Growth Story Intact; Buy, TP $2.20
CWT SP | Mkt Cap USD872.8m | ADTV USD1.1m
1Q13 net profit was within expectation. Our expectation of a 30% profit
growth  for  the  full-year  remains  intact  and  we  continue  to  see a
multi-year structural growth story from here.
We estimate that volume in its commodity trading business grew by more
 than  20%,  which  is  encouraging.  We  expect  to see operating leverage
 kicking in as the year goes on.
We  keep estimates unchanged and adjust our SOTP TP to SGD2.20. The
acquisition  of  a  new  land  at  Pandan  Ave  will likely add between
SGD0.15-SGD0.20 to value per share.

Local Brokerages Stock Call 14 May 2013

From OCBC:
Golden Agri-Resources: Upgrade to BUY on valuation ground
Golden Agri-Resources (GAR) posted 1Q13 revenue of US$1430.1m, weighed down by lower CPO prices; but still managed to meet 22% of our full-year forecast. We estimate that core earnings came in at around US$113m, down 30% YoY but up 176% QoQ, and also met 23% of our FY13 forecast. Management noted that the better showing came from lower operating expenses, improved performance at its China operations and the sell-down of inventory, which came as a big relief. While CPO prices may still remain weak in the near term, headwinds appear to be dissipating; management is also remaining fairly upbeat about its prospects as it continues to expand its integrated operation capabilities to benefit from the firm industry outlook. Coupled with the recent fall in share price, GAR now looks relatively attractive with a 19% upside to our unchanged S$0.63 fair value (based on 12.5x FY13F EPS). Hence from a valuation standpoint, we upgrade our call from Hold to BUY. 

City Developments Limited: Still executing well
1Q13 PATMI came in at S$137.7m, down 12% YoY mostly due to the absence of a disposal gain from the Tagore Avenue warehouse sale in 1Q12, partially offset by gains from strata units sales in non-core industrial assets. First quarter PATMI now makes up 26% of our full year forecast, which we judge to be in line with expectations. In 1Q13, the group launched two projects, the 912-unit D’Nest and 868-unit Bartley Ridge, of which 87% and 62% of total units have been sold – a reasonably firm set of performances. The group’s hotel subsidiary, M&C, reported a soft set of first quarter numbers, with 1Q13 PATMI down 29% YoY due to a room refurbishment program that removed over 100k room nights and more difficult sector conditions. Maintain HOLD on CDL with an unchanged fair value estimate of S$12.04 (15% RNAV disc.).

Goodpack Limited: Catalyst delayed
Goodpack’s 3Q13 results met our expectations with revenue growing 3.0% YoY to US$44.8m on the back of continued gains from its synthetic rubber segment. Although operating expenses fell slightly and operating profit increased by 7.5% to US$16.3m, higher financing expenses caused PATMI for the quarter to fall 5.9% to US$10.9m. Entering 4Q13, we reduce our revenue projections following a delay in IBC usage for two new synthetic rubber contract wins back in 2Q13 but still expect a decent showing for its 4Q13 results. While we deem its recent share price decline to be overdone, our fair value falls to S$1.80 (S$1.95 previously) due to the lack of a near-term catalyst. Downgrade to HOLD.

Nam Cheong: 1Q net profit up 8% to RM35.8m
Nam Cheong Limited’s revenue and net profit increased by 14% and 8% YoY to RM234.7m and RM35.8m respectively. Gross margin declined to 18.6% from 22.6% in the year-ago period, mainly due to lower utilization of its vessel fleet. The group also had a disposal gain of RM2.8m, relating to one SSV. Separately, Nam Cheong announced the sale of five vessels worth US$110m, relating to one 5,150 bhp AHTS and four PSVs. The group, which already has an existing net order-book of RM1.3b, plans to expand its shipbuilding programme to 28 vessels for 2014 (2013: 19 vessels). We continue to like the group for its growth profile and keep our BUY rating and fair value estimate of S$0.30 unchanged.

Viz Branz Limited: Best operating margins since FY10
Viz Branz’s 3Q13 results was in-line with expectations with a decline in revenue offset by continued margin improvements due to the favourable raw material cost environment. While we lowered our FY13 projections to account for the seasonally weaker 4Q13, we expect margin improvements to persist and VB should remain on track to record a better FY13 performance in terms of PATMI growth. In addition, its growth prospects in its key China market remain decent. We leave our fair value estimate unchanged at S$0.74 and keep our BUY rating on the counter. In terms of the likelihood of a GO, we remain steadfast in our assertion that it will materialize, albeit at a later date and with a potentially different acquirer. 

From Maybank KE:
Super Group: Fresh coffee, Fresh perspective; Buy, TP $6.30
SUPER SP | Mkt Cap USD2.2b | ADTV USD2.0m
1Q13  results were within expectations. Recurring net profit growth of
30% yoy were driven by higher revenue and better margins.
While  we  expect  margins  to moderate over the next few quarters, we
still expect strength due to 1) higher-value products coming on stream and
economies of scale.
With  resilient  earnings  and  a  free  cash  flow  which  will  grow
exponentially  from next year, we think it is now appropriate to value the
stock  on  a  DCF  basis, which yields a fresh TP of SGD6.30, implying 30%
upside from here.
 
Bumitama: Off To a Slow Start; Buy, TP $1.24
BAL SP | Mkt Cap USD1.4b | ADTV USD0.8m
1Q  is  traditionally  the  weakest quarter in terms of FFB output.
Coupled  with  low  CPO  ASP  achieved,  BAL’s  1Q13 core net profit of
IDR152m  (-20%  QoQ,  -20%  YoY)  met  18% and 16% of our and consensus
estimates   –   within  our  expectations  but  slightly  below  street
estimates.
We  expect  stronger  performance  in  2H13  on seasonally stronger
production and higher CPO ASP to drive earnings growth for 2013.
Maintain  BUY with unchanged TP of SGD1.24 TP on 16x FY14 PER, with
implied 0.9x PEG.
 
Wing Tai Holdings: “Verticas” Earnings Climb; Buy, TP $2.64
WINGT SP | Mkt Cap USD1.5b | ADTV USD1.8m
We  reiterate  our  BUY  recommendation  on  Wing Tai as its 3QFYJun13
results  beat  all expectations with the surprise contribution from its KL
project, Verticas Residences. Our target price has been raised to SGD2.64.
On  the back of the contributions from Verticas Residences, Wing Tai’s
9MFYJun13  PATMI  came in at 115% of our Street-high estimate, and 124% of
consensus forecasts. We have raised our FYJun13 forecast by 36%.
Sales at Helios Residences remained slow but steady (~10 units sold
in  the  quarter).  At  0.75x  P/B and 0.6x P/RNAV, we believe Wing Tai
remains very undervalued.
 
China Minzhong: Volume Growth to Offset Margin Decline; Buy, TP $1.36
MINZ SP | Mkt Cap USD541.4m | ADTV USD7.9m
We  continue  to  like Minzhong’s growth outlook and the alliance with
Indofood  post its 3Q FY13 results. Maintain our BUY rating and our target
price at SGD1.36.
3QFY13  bottom line growth of 6% was disappointing. But we believe the
revenue  growth  could  be  more than offsetting the decline in margin. We
still look at double digit net profit growth going forward.
Current 3.8x FY14 PER seems not justified for a double-digit growth
company  in  our  view.  The  next  catalyst  for the stock will be the
potential dividends next quarter.
 
Goodpack: Another slow quarter; Hold, TP $1.75
GPACK SP | Mkt Cap USD773.4m | ADTV USD0.4m
3Q13 results were below expectations, with revenue growth continuing to
decelerate on slower business activities in existing segments.
Revenue  grew  3%  yoy, while net profit declined 6% yoy, despite cost
savings coming through from more efficiency in US and Europe.
With  no  earnings growth visibility nor clear catalyst in place at
least  over the next 1-3 quarters, the stock is likely to underperform.
Our  new  TP of SGD1.75 is pegged to 17x FY13F, in-line with historical
5-year average. 

From DBS:
Singapore banks have rallied strongly after the release of
1Q13 results. But our banking analyst believes this is as
strong as it could get fundamentally. All eyes will remain
on NIM for any upside surprises as other P&L levers are
largely stretched. Consensus has raised earnings
expectations to show 1% growth from 1% earnings
contraction before. We are keeping our 3% earnings
growth projection for 2013. Expect some consolidation in
the near term; take profit. We believe regionalisation
efforts would re-rate the Singapore banks in the longer
term. Maintain HOLD on OCBC; TP at S$11.50. We have a
Fully Valued call on UOB, TP S$20.10.

3Q13 bottomline for Goodpack was below on lower fleet
expansion and Intermediate Bulk Containers (IBC)
turnaround. We have trimmed FY13/14F estimates by
3%/7% on slower demand recovery. Nevertheless, we
remain optimistic on Goodpack’s fundamentals and
growth prospects from FY14 on the back of market share
gains in synthetic rubber (SR, especially in Russia and
Singapore) and autopart segments. While earnings are
expected to grow 19% q-o-q going into the seasonally
stronger 4Q with contribution from non-rubber products
and maiden Russian SR sales, we would like to await
macro and industry data for cues. Downgrade to HOLD,
with a lower TP of S$1.90 (Prev S$ 1.95).

Nam Cheong’s 1Q13 earnings were up 8% y-o-y to
RM36m, largely in line. The pace of vessel sales is ahead
of expectations. The latest new vessel sales contracts for 5
vessels worth US$110m improve revenue visibility further.
FY13/14F earnings were raised by 4%/14%. The Group
remains well on track to deliver on its newbuild
programme of 19 vessels in FY13 and 25 vessels in FY14,
underpinning net profit growth trajectory of 20% CAGR
over FY12-14. Maintain BUY with higher TP of S$0.36
(Prev S$ 0.30).

1Q13 core net profit of Rp151.5bn for Bumitama Agri
made up only 15% of our initial FY13F. High cost of
logistics and jump in third party FFB pushed costs up.
FY13F/14F/15F earnings cut by 13%/6%/3%; TP lowered
to S$1.12 (Prev S$ 1.18). HOLD maintained for 11%
upside to revised TP.

First Resources reported 1Q13 core net profit of
US$63.6m (+25% y-o-y; -17% q-o-q). This represented
35% of our full year forecast - ahead of expectations.
Despite the strong results, we are putting our forecasts
under review due to lower than expected yields. Will
provide more updates.

1Q13 earnings for Super Group were in line, driven by
higher gross margins and ingredients segment. FY12-
FY14F 20% CAGR growth will be supported by Branded
Consumer and Food Ingredient segments. Maintain Buy
with higher TP of S$5.35 (Prev S$ 4.68).

1Q13 earnings for City Developments dipped 12% y-o-y,
and account for 20% of our full year forecast. The drag
came largely from lower residential and hotel revenue.
Looking ahead, residential activities offer visible earnings
stream while hotel operations continue to face
challenges. Maintain Hold, TP S$12.33.

Wing Tai reported 3Q13 net profit of $94.6m, bringing
9M13 bottomline to $255.3m, ahead of our expectations.
Looking ahead, the group plans to market The Tembusu,
a 337-unit freehold development along old Tampines Rd
in the coming months. In addition, the group has another
project along Prince Charles Crescent (JV with UEL,
Metro) that is scheduled to be marketed in coming
months. This provides earnings and cashflow visibility for
FY14. Current TP of $2.33 under review, likely to remain
Buy with a slightly higher TP. 


 

Local Brokerages Stock Call 13 May 2013

From OCBC:
ECS Holdings: Double-digit growth delivered
Summary: ECS Holdings (ECS) reported a positive set of 1Q13 results which exceeded our expectations. Estimated core PATMI jumped 28.6% YoY to S$8.5m on the back of a 20.9% YoY increase in revenue to S$1,090.3m. The group managed to record healthy YoY revenue and EBIT growth for all of its core segments. However, its gross margin slipped 0.4ppt to 3.7% in 1Q13 due largely to a change in product mix. We lift our FY13 and FY14 revenue projections by 8.9% and 10.6%, respectively. But as we also lower our margin assumptions slightly, our FY13 and FY14 core PATMI estimates are raised by a smaller magnitude of 4.2% each. Correspondingly, our fair value estimate increases from S$0.53 to S$0.57, now pegged to 6x FY13F EPS (previously 5.8x).  As ECS is trading at an attractive 5.0x and 0.52x FY13F PER and P/NTA, respectively, we upgrade the stock from Hold to BUY. 
 
UOL Group: Proposed delisting of Pan Pacific Hotels
Summary: UOL’s 1Q13 PATMI decreased 15% YoY to S$71.7m mostly due to a weak contribution from its hotel segment. 1Q earnings now make up 19% of our full-year forecast, which we judge to be generally within expectations and is tracking marginally below due to lumpy progress recognition at development projects. In addition, the group has made a cash offer of S$2.55 per share (9% premium over last transacted price) to delist PPHG (Pan Pacific Hotels Group), conditional on the shareholder approval. We see this as a sensible move which would consolidate the group’s hotel assets at a fairly reasonable price. That said, from our discussions with management, it appears unlikely that material operating changes, i.e., a major re-structuring or REIT listing, are in store for PPHG assets. Maintain HOLD with a higher fair value estimate of S$7.16 (20% RNAV disc.), versus S$6.01 previously, as we work into our valuation model higher prices of listed holdings and the Sengkang acquisition.

Midas Holdings: Expects net loss in 1Q13
Summary: Midas Holdings (Midas) has issued a negative profit guidance prior to its upcoming 1Q13 results release, saying that it expects to report an unaudited net loss. This is mainly due to lower revenue and gross profit margin given the change in product mix and weaker utilisation rates, as well as higher operating expenses and finance costs and a share of loss from its associated company, Nanjing SR Puzhen Rail Transport (NPRT). This profit guidance comes as no surprise to us as we had forecasted Midas to record a net loss of CNY3.2m in 1Q13. We still expect Midas to stage a recovery in 2H13, but the strength of this recovery will be dependent on the developments in China’s high-speed railway sector. Midas will report its 1Q13 results on 14 May after trading hours, while an analyst conference call has been scheduled the day after. We will provide more updates then. For now, we have a BUY rating and S$0.595 fair value estimate on the stock. 
 
Biosensors International Group: Proposed acquisition of assets from Spectrum Dynamics
Summary: Biosensors International Group (BIG) announced this morning that it has entered into an agreement to acquire substantially all the assets of Spectrum Dynamics (SD), which is a privately held company. SD is a medical imaging and clinical applications company involved in the designing, developing, manufacturing and distribution of medical imaging systems and technology in multiple fields. The initial deal consideration is US$51.1m (book value of SD’s assets valued at ~US$7.3m as at 31 Mar 2013), and will be funded by internal resources. Subsequent performance payments of US$4m and US$15m may be paid to SD if certain performance benchmarks are met in 2014 and 2016, respectively. We are positive on this move as it allows BIG to diversify its product offerings and revenue stream. But as the acquisition is not expected to have a material impact on the EPS and NTA of BIG in FY14, we leave our forecasts unchanged for now. Maintain BUY and S$1.60 fair value estimate on BIG.
  
From Lim & Tan:
We are downgrading Midas (50.5 cents, unchanged)
to Neutral as we expect downward revisions in
consensus profit estimates by 20% to Rmb100mln
after the company warned that it expects to be loss
making in 1Q13, reversing last year and last quarter¡¦s
profit of Rmb16mln as a result of lower sales, lower
margins due to weaker product mix and increased
fixed costs, as well as larger losses from 32.5% owned
Nanjing Puzhen and higher operating costs.

We are upgrading our recommendation on China
Minzhong ($1.10, up 4 cents) to Neutral from Sell
as the stock has declined 11% since our last sell
recommendation in early March13 and while its 3Q
to Mar13 profit growth of 5.9% to Rmb255mln,
bringing 9 months to Mar13 profit up 17% to
Rmb593mln was about in line with expectations as
solid top-line growth of 28% yoy was eroded by cost
inflation in China. Expectations of a final dividend
payment for full year to June13, however small, could
provide some support.

 We are upgrading our recommendation on Yamada
(26 cents, up 1/2 cent) to Neutral from Sell as the stock
has declined 15% since our last sell recommendation
in Mar13 and while 3Q to Mar13 profit has continued
to decline 37% to Rmb51mln, bringing 9 months to
Mar13 profit down 57% to Rmb69mln, prospects are
looking better with the company expecting their raw
material costs to moderate as they are able to source
their own raw materials rather than buy externally.
This should help improve margins going forward.

We suspect a replay of Guoco Group (HK$92.40,
up 10 cents) could be at work in Guoco Leisure (85
cents, up 1/2 cent) where the former had reported a
huge US$330mln loss in 1H2012 only to see Tan Sri
QLC launch in privatization offer in Dec12 at HK$88
per share and recently revised it up to HK$100 per
share, significantly above the pre-privatization price
of HK$60. Guoco Leisure had just reported a loss
for 3Q to Mar13 of US$6.5mln due to the eurozone
crisis. Technically, a break of the 78-80 cents level
suggests lower levels. It is currently trading at 0.77x
its NAV of $1.10 a share. We do not yet have a rating
on the stock. 

From UOB KH:
Singapore Airlines (SIA SP, C6L) –
Recovery in 4QFY13; Benign fuel outlook
Last price: S$11.39
Target Price: S$13.50
The recent decline in crude oil has lowered jet fuel prices and
we expect the trend to continue into the coming quarters. SIA,
trading at the lowest P/B among Asian carriers under our
coverage, should be the first to be re-rated. We expect SIA to
report better quarterly results (4QFY13), primarily due to lower
unit costs. While the market has been hopeful of a potential
special dividend following the divestment of Virgin Atlantic,
recent investments made into Tiger Airways and Virgin Australia
have exceeded the proceeds. We now value SIA, excluding SIA
Engineering, at 0.9x FY14F book value, and consequently raised
our target price by 26% to S$13.50. We upgraded our call to
BUY on 3 May 13.
Technically, the stock could trend higher after being supported
near S$10.60/10.00. The stock could move towards S$13.20
after a potential breakout.

China Aviation Oil (CAO SP, G92) –
Optimisation bearing fruit
Last price: S$1.085
Target Price: S$1.30
We have upgraded CAO to BUY after it reported a better-than expected
set of results. We believe that the optimisation of the trading segment
and an increase in strategic acquisition is bearing fruit as shown by 
the 44% jump in gross profit. CAO’s business model gives it an advantage.
The company supplies jet fuel to China annually and makes a fixed spread
gross profit.
When trading opportunities arise, traders can also lock in
profits. This type of business model makes it unlikely to book an
operational loss. While we think contributions from its 30%-
owned subsidiary are likely to be lower in the near term, the
stock’s share price has also retraced 15% from the high. We
believe this is a good level for investors to accumulate and we
have raised our target price for the stock to S$1.30, based on a
blend of our dividend discount model and an 11x PE valuation.
We upgraded our recommendation to BUY on 3 May 13.
Technically, the stock appears to be supported near S$0.95 and
could increase its odds of a downtrend reversal as prices are
trading towards S$1.10/S$1.22.

Ezion Holdings (EZI SP, 5ME) –
1Q13 results ahead of expectations
Last price: S$2.29
Target Price: S$2.60
Ezion’s net profit more than doubled in 1Q13 due to a one-off
gain. Excluding this, results were still ahead of expectations and
we expect higher earnings in the remaining quarters of the year
as more liftboats and service rigs commence operation. Over
2013-15, we project operating profit to treble. Following its
recent breakthroughs in Indonesia, Malaysia and Vietnam, we
also expect Ezion to announce more new charter contracts this
year. Ytd, it has already won five. We have raised our earnings
forecasts and target price to S$2.60, which is pegged at 11x
2014F EPS. We maintain our BUY recommendation.
Technically, the stock appears to continue to trend up with price
well support near S$1.98/1.90. The technical price objective
could be at S$2.55.

Parkway Life REIT- Fundamentals intact although valuations starting to look rich.
Downgrade to HOLD.
(PREIT SP/HOLD/S$2.74/Target: S$2.70)
FY13F DPU Yld (%): 3.9
FY14F DPU Yld (%): 4.1
Results in line with expectations. Parkway Life REIT (PLife) reported 1Q13 distributable income of S$16.0m (+2.9% yoy, -1.8% qoq) or a DPU of 2.64 S cents (+2.9% yoy, -1.9% qoq). The DPU for 1Q13 is within expectations at 25.4% of our full-year
forecasts.
Acquisitions of nursing homes in Japan are likely to continue due to PLife’s strategic partnership with Japan nursing home operators, but remain opportunistic as competition intensifies due to rising liquidity spurred by monetary easing. For example
Shinsei Bank is establishing the first healthcare REIT in Japan, while Singapore’s Healthway Medical has established a ¥15b fund to invest in nursing homes in Japan.
We downgrade to HOLD with a higher target price of S$2.70 (from S$2.62). We use the dividend discount model (required rate of return: 5.9%, terminal growth: 2.0%) to value PLife. Entry price is at S$2.35.

From DBS:
DBSV Research is initiating coverage on Thai Beverage
with a BUY recommendation and target price of S$0.80,
offering 30% total return upside on regional F&B player in
the making. Thai Bev is a market leader in spirits, green
tea and established distribution network in Thailand. We
expect continued re-rating to global/regional peers
average. The potential inclusion in MSCI could be a
catalyst.

The F&N Board has proposed a cash distribution of
S$3.28/share (total of S$4.73bn) via a proposed capital
reduction exercise. This accounts for c.85% of APB sales
proceeds of S$5.59bn. The timing of this capital reduction
is not surprising given expectations that its controlling
shareholders would be looking at extracting cash to pare
down debt that was undertaken for the takeover. F&N’s
2Q13 results were flat but within expectations. We expect
a stronger 2H on overseas property recognition. We
expect limited downside on the share price backed by its
proposed S$3.28/share cash distribution, and stable
earnings with its S$3.3bn in unrecognized revenue from
presold development properties. Maintain HOLD, TP
revised to S$9.52 (Prev S$ 8.99).

Mapletree Greater China Commercial Trust’s Festival Walk
continues to show resilience in tenant trades. Our latest
checks with management showed that the property
continued to enjoy a 9% y-o-y growth in tenant sales
from Jan-Mar 13 (up from 6% y-o-y expansion in the
previous quarter). Over the next few quarters, we believe
organic growth would remain the strongest drivers. With
80% of FY14 lease expiries at Festival Walk already locked
in and one thirds of renewals at Gateway Plaza
already re-contracted, earnings visibility and sustainability
is strong. Maintain Buy, TP S$1.22 (Prev S$ 1.18). The
trust is offering yields of 4.7% in FY14 and 5.3% in FY15.

9M12 earnings of RM 136m (+17%) for Silverlake Axis
were in line. FY13F/14F/15F earnings raised
6%/14%/19% on the back of recent acquisition and new
project pipeline. Maintain BUY, TP raised to S$0.80 (Prev
S$ 0.58) offering 14% potential returns over the next one
year.

1Q13 results for Pan-United Corporation in line, driven by
volume increases in Building Materials segment and
higher utilisation at CXP port. We expect construction
activities to rise and earnings growth is set to accelerate in
FY14F. We are neutral to PAN whether it increases,
maintains or decreases its CXP stake. Maintain BUY with
S$1.16 TP.

Earnings for UOL declined y-o-y on lower residential
recognition, and accounted for 16% of our full year
forecast. We expect earnings to be back end loaded this
year, with 2 residential projects to receive TOP this year
(1in Q2, 1 in Q4) and the launch of the Bright Hill Dr and
St Patrick’s Garden sites in 3Q13. The group has launched
a delisting and exit offer for the remaining stake in Pan
Pacific Hotels Group (PPHG) at SS$2.55/share. The offer
price is 3% lower than the Dec 12 RNAV of S$2.64 and at
a 65.5% premium to its book NTA of S$1.54. The
privatisation of PPHG gives more operational flex and
potential for RNAV expansion. Maintain BUY, TP raised to
S$8.21 (Prev S$ 7.77).

3Q13 net profit of US$4.1m (-25% y-o-y, -14% q-o-q) for
Amtek came in 50% below our forecasts. Tooling sales
were robust but outlook is dragged by the uncertain end
demand. FY13/14F earnings cut by 19%/16% to reflect
lower margin and higher tax rate. Maintain Fully Valued,
TP lowered to S$0.45 (Prev S$ 0.46) following earnings
cut and a rollover to blended FY13/14F from FY13
previously.

Nam Cheong’s 1Q13 earnings were largely in line at
RM35.8m, up 8% y-o-y. Revenue was up 14% to
RM235m on the back of delivery of 5 vessels during the
quarter. Shipbuilding gross margin was slightly below
expectations at 17% in 1Q13, but within guided range.
The Group also announced significant contract wins
worth a total of US$110m – for 1 AHTS vessel sold to a
new Indonesian customer + 4 PSVs sold to an existing
customer. The Group remains well on track to sell and
deliver on its newbuild programme of 19 vessels in FY13
and 25 vessels in FY14, underpinning earnings growth
trajectory of >20% CAGR over FY12-14. Including buildto-
order vessels, orderbook is now at record levels of
RM1.7bn. Maintain BUY, estimates and TP under review
 with likely upward bias), pending discussions with
management and analyst briefing today. 

Cosco Corp has signed a contract with a Malaysian
shipowner to build a floatover launch barge worth over
US$23m. Delivery is slated for 4Q13 from its Zhoushan
yard. With this contract, Cosco's YTD win is lifted to
US$277m. Management guided US$2bn order win this
year with 90% coming from offshore projects. YTD wins
seem lagging, forming only 14% of company's target
new order (as well as our assumption). Maintain FULLY
VALUED, TP: S$0.75.