From UOB KH:
Jardine Cycle & Carriage (JCNC SP, C07) -
Technical SELL with +13.4% potential return
Last price: S$46.79
Resistance: S$49.00
Support: S$40.50
SELL with a target price of S$40.50 with tight stops placed
above S$49.00. The stock appears to have failed to continue
with its rebound and prices have been resisted by its
declining 50-day moving average. A dead cross has formed at
its 50- and 200-day moving averages. Its MACD line is below
its centreline and its Stochastics indicator looks poised to
form a bearish crossover. Watch to see if the stock could
move below its recent low of S$44.70, which is also near its
lower Bollinger band.
Swing Media Technology Group (SWM SP, O2F) -
Technical BUY with +15.3% potential return
Last price: S$0.124
Resistance: S$0.143
Support: S$0.11
BUY with a target price of S$0.143 with tight stops placed
below S$0.115. The stock has formed higher lows and has
been trading above its mid Bollinger band. A golden cross
looks poised to form at its 10- and 35-day moving averages.
Its RSI has turned up above a reading of 40 and a bullish
crossover has formed at its Stochastics indicator. Watch to
see if its MACD could move above its centreline.
Sound Global (EPUR SP, E6E) -
Technical BUY with +13.6% potential return
Last price: S$0.625
Resistance: S$0.71
Support: S$0.565
Maintain BUY with a higher target price of S$0.71 with
tight/trailing stops placed below S$0.585 (previous technical
buy was featured on 21 Mar 13 with a target of S$0.615,
stops below S$0.48). The stock has attempted to close the
gap down on 4 Mar 13 and prices have been supported above
its mid Bollinger band. A golden cross looks poised to form at
its 50- and 200-day moving averages. Its MACD indicator has
crossed above its centreline and appears to be trending up.
Watch to see if the stock could continue to trade above
S$0.625.
Singapore Mid-cap Highlight: Courts Asia
We remain sanguine on prospects post the analyst briefing. CAL remains an attractive proxy on robust consumer demand in Singapore and Malaysia. BUY with a target price of S$1.20/share.
Background on CAL. CAL is Singapore’s largest and Malaysia’s second largest electrical, IT and furniture retailer in terms of 2011 total sales. The ‘Courts’ brand is associated with quality products at affordable prices. Under ‘Courts Flexi Schemes’, CAL operates a proprietary credit business, which allows customers to make purchases through credit accounts opened directly with CAL. Besides Singapore and Malaysia, CAL holds branding rights to operate in 16 other countries in Asia Pacific.
Updates on new store openings in Malaysia and Singapore. The company expects to open its 108,000sf Megastore in Malaysia in Aug 13; their targeted expansion plan is to have an average increase of 120,000sf a year in Malaysia. CAL will also be adding two new stores in Singapore by the end of this year.
Maintain BUY with a higher target price of S$1.20 (previously S$1.14). We raised our target price by 5% to rollover valuations to 2014 and to assume a lower discount of 10% to peers (previously 20%). We believe this to be justified as the group ventures beyond Singapore and Malaysia will drive medium- to long-term growth.
From DBS:
4Q13 headline net profit of S$6.8m for United Envirotech
met our S$6.2m forecasts but fell short if we exclude the
S$1.8m of forex gain. Higher contribution from EPC drags
margins but growing Treatment supports transformation
to a recurring earnings model. Earnings estimates are
intact as higher costs offset the increase in turnover.
However, higher tariffs and capacity have lifted
Treatment’s DCF valuation and therefore, our fair value is
lifted to S$0.97 (Prev S$ 0.74). UENV’s share price has
done exceedingly well, rising 90% YTD. We believe near
term upside will be capped, but acquisitions or new
contracts are re-rating catalysts. Downgrade to HOLD.
4Q13/FY13 results for Biosensors in line, driven by product
revenue segment, but licensing revenue disappoints. Our
analyst has cut FY14F/FY15F earnings by 11% and 2% on
lower licensing revenues. Outlook remains positive for
BIG’s worldwide business. Maintain BUY with lower TP of
S$1.64 (Prev S$ 1.71).
Ezra's subsea division EMAS AMC has secured a vessel
charter contract for its incoming pipelay vessel, Lewek
Centurion, from Norwegian subsea contractor Cecon for
the installation of some 60km of pipelines in 3Q-2013.
Contract value is however, unlikely to be material, given
that EMAS AMC will not be providing the subsea
installation services and will just secure day rates for
contract of the vessel to Cecon over a short period of
about 2 months. No change to our earnings estimates,
given that the contract win is within our expectations. In
the near term, healthy order win momentum will likely be
overshadowed by execution concerns, given that earnings
have lagged expectations in the last couple of quarters.
While the road to recovery will be bumpy, we see
earnings accelerating from 2H-FY13 onwards as the
project pipeline moves into execution phase. Re-rating
should be possible when Ezra demonstrates sustainable
earnings turnaround in coming quarters. Maintain BUY
and TP of S$1.56.
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Thursday, May 30, 2013
Local Brokerages Stock Call 30 May 2013
Wednesday, May 29, 2013
Local Brokerages Stock Call 29 May 2013
From OCBC:
Tat Hong Holdings: Taking a healthy pause
Tat
Hong reported revenue and net profit to shareholders of S$837m (+16%)
and S$70m (+67%) respectively for FY13. The results were in line with
ours and the street’s estimates. Gross profit margin improved to 37.6%
for FY13 (FY12: 36.5%) due to greater contribution from the
higher-margin Crane Rental and Tower Crane businesses. Although the
outlook for its key markets remains positive, management believes it is
time to slow down its fleet expansion, after a 79% surge in fleet
tonnage in the past 5 years. It will now focus on raising its crane
productivity, and reducing operating costs through the use of its new
yard in Iskandar. Although this may mean more a modest PATMI growth rate
of about 10%, the improving cashflow would also bring its gearing level
to a more sustainable level. Maintain BUY with unchanged S$1.75 fair value estimate.
United Envirotech: FY13 results almost spot-on
United
Envirotech Ltd (UEL) reported its FY13 results last night, with revenue
jumping 117% to S$185.0m, or just 2% above our forecast, aided by
higher engineering business (+132%) and also the 77% jump in water
treatment business. Net profit surged 182% to S$29.5m, and was about
1.6% ahead of our estimate. UEL also declared a final dividend of
S$0.005/share. Going forward, management continues to see growing demand
for membrane-based eater and waste-water treatment services, especially
in China; this mainly driven by stricter discharge limits imposed by
the Chinese government and the shortage of water supply in various parts
of the mainland. We will be speaking to management shortly to get
greater clarity on its plans. Meanwhile, we are placing our Buy rating
and S$0.90 fair value under review.
From DBS:
4Q13 earnings for Tat Hong were in line, driven by
stronger crane rental margins. A final DPS of 2.5 Scts
came as a surprise. Singapore and Asean markets will
drive growth while rental and utilisation rates are
expected to stay high. Maintain BUY with TP unchanged
at S$1.80.
United Envirotech reported net profit of S$6.8m (+406%
y-o-y, -20% q-o-q), slightly ahead of our S$6.2m forecast,
thanks to stronger than expected revenue of S$46.8m
(+144% y-o-y, -10% q-o-q). Revenue growth was broadbased.
EPC and Treatment surged 155% y-o-y and 121%
respectively. Although EPC continued to dominate,
forming 69% of sales, Treatment income has risen this
quarter. This positive trend represents a good build up of
recurring income stream. We will review our forecast,
target price and rating post conference call with
management this morning.
From UOB KH:
Tuesday, May 28, 2013
Local Brokerages Stock Call 28 May 2013
From OCBC:
KSH Holdings: A strong year of performance
Summary: KSH
reported 4QFY13 PATMI of S$14.0m, up 85% YoY mostly due to an increase
in profit contributions from development projects held by its associates
and JVs. On a full year basis, FY13 PATMI is S$36.3m which increased a
strong 98%. We judge this to be somewhat above our expectations (our
FY13 PATMI forecast is S$30.7m) as the pace of revenue recognition at JV
development projects came in faster than anticipated. Management
proposed a final dividend of 1.15 S-cents per share. Likely catalysts
ahead includes major pipeline launches at Hong Leong Garden (NeWest),
King Albert Park and Seletar Garden which would all likely take place
this year. In China, KSH’s 45% Beijing condo project could also begin
sales this year. We view a potential firm performance at this project to
be significant for KSH’s earnings profile which could sustain earnings
growth into FY15 by contributing an estimated S$23m net earnings upon
TOP. Maintain BUY with an unchanged fair value estimate of S$0.73.
Yoma Strategic Holdings: Catalysts ahead – upgrade to HOLD
Summary:
Yoma reported 4QFY13 PATMI of S$11.5m, up 452% YoY mostly due to a
S$9.1m one-time gain. FY13 PATMI cumulates to S$14.4m and, excluding
one-time gains, is judged to be generally in line with our forecast. We
see the completion of the Landmark Project acquisition as a key
catalyst for the share price ahead but note that management has raised
the possibility of another deadline extension. That said, the signing of
a Heads of Agreement with the Hong Kong and Shanghai Hotels Group and
other preparations by Yoma for site development points to a good level
of confidence that they would acquire the site eventually, in our view.
Sales at launched projects remain firm, with 491 out of total 528 units
sold in buildings 3 and 4 at Star City. In addition, management showed a
strong deal-making record in FY13 and is in the midst of acquiring more
land sites and establishing businesses in tourism, retail, agriculture
and automobiles. Upgrade to HOLD with an increased fair value
estimate of S$0.87 (20% premium to RNAV), versus S$0.71 previously, as
we incorporate firmer valuations for the Landmark Project and Yoma’s
existing land bank into our model.
Valuetronics Holdings: Starting on a fresh page
Summary: Valuetronics
Holdings Limited’s (VHL) FY13 results were within our expectations.
Revenue from continuing operations fell 3.4% to HK$2,210.2m, or just
0.6% shy of our forecast. Net profit from continuing operations fell
26.1% to HK$118.4m, while net losses from its now discontinued Licensing
division widened by 32.7% to HK$39.8m, resulting in overall PATMI
decline of 39.6% to HK$78.7m. Excluding exceptional items, we estimate
that core PATMI for FY13 fell 14.7% to HK$103.7m (1.1% above our
estimate). VHL also slashed its FY13 DPS from HK$0.17 to HK$0.08. This
was below our HK$0.11/share forecast but still translates into a decent
yield of ~6.0%. We foresee an improvement in VHL’s bottomline and DPS in
FY14 as it does not expect to incur any further expenses for its
Licensing business. We maintain our HOLD rating but raise our
fair value estimate slightly from S$0.19 to S$0.195 due to a marginal
2.7% increase in our FY14 core PATMI forecast.
Sembcorp Marine: Secures US$596m jack-up rig order from Noble
Summary: Sembcorp
Marine (SMM) announced that subsidiary Jurong Shipyard has secured a
US$596m contract for a newbuild ultra-high spec jack-up rig for use in
the United Kingdom sector in the North Sea from Noble Corporation. There
is also an option for an additional unit. Calling it the “most advanced
and versatile of its kind in the industry”, this rig will be
constructed based on the Gusto MSC CJ70 design, and is in line with an
enhanced version of Statoil’s “Cat J” specifications. Indeed, we note
that the last Gusto MSC CJ70 order secured by SMM had a price tag of
US$450m in Mar 2011. With this latest win (scheduled for delivery in
1Q16), SMM has secured orders about US$2.4b YTD, accounting for around
60% of our full-year estimate. Maintain BUY with S$5.64 fair value estimate.
Singapore Airlines – Grounds another cargo plane
Summary:
Singapore Airlines (SIA) announced that it will park another cargo
freight plane until May 2014 in an effort to cut its cargo capacity
further. This will be the second freighter taken out of service with the
first pulled out in Dec 2012. As a recap, in its recent FY13 results,
SIA Cargo experienced an operating loss for its second straight year.
While the move is a welcomed one in light of the weak air cargo market,
particularly in Asia-Pacific, we still expect operating losses for the
division in FY14 and assert that a turnaround is unlikely even with
capacity cuts as cargo yields remain depressed. Overall, SIA as a group
continues to face competitive pressures from other premium carriers, and
management has yet to take any concrete steps to invigorate its
business prospects. Therefore, we maintain our SELL rating on SIA with an unchanged fair value estimate of S$10.00.
From UOB KH:
First Resources (FR SP, EB5) -
Technical BUY with +11.4% potential return
Last price: S$1.885
Resistance: S$2.10
Support: S$1.77
BUY with a target price of S$2.10 with tight stops placed
below S$1.80. The stock has broken above its downward
sloping trendline and is currently trading above its 20- and
50-day moving averages. Potentially, these moving averages
looks poised to form a golden cross. Its MACD indicator has
crossed above its centerline.
Our institutional research has a fundamental BUY with a
target price of S$2.34.
Overseas Education (OEL SP, RQ1) -
Technical BUY with +22.6% potential return
Last price: S$0.685
Resistance: S$0.84
Support: S$0.665
BUY with a target price of S$0.84 with tight stops placed
below S$0.660. The stock appears to have rebounded from
its trendline extension and from its lower Bollinger band.
Stochastics indicator has formed a bullish crossover in the
oversold region and MACD indicator looks poised to form one
as well. Watch to see if prices could break above its all-time
high of S$0.755 to test S$0.84.
Our retail research has a fundamental BUY with a target price
of S$0.88.
Dukang Distillers Holdings (DKNG SP, GJ8) -
Technical SELL with +14% potential return
Last price: S$0.515
Resistance: S$0.55
Support: S$0.42
SELL with a target price of S$0.42 with tight stops placed
above S$0.55. The stock has formed a shooting star pattern,
which could suggest an interim top has formed. Prices could
move lower from its upper Bollinger band. Stochastics
indicator has formed a bearish crossover in the overbought
region and RSI indicator has turned down after being resisted
near a reading of 80. Watch to see if the stock could be
supported by its rising 50-day moving average.
CDL Hospitality Trusts- Orchard Hotel Shopping Arcade makeover.
(CDREIT SP/BUY/S$1.93/Target: S$2.36)
FY13F DPU Yld (%): 6.0
FY14F DPU Yld (%): 5.9
CDL Hospitality Trusts (CDREIT) has announced an asset enhancement (AEI) at Orchard Hotel Shopping Arcade (OHSA),
repositioning the mall with a more family-centric theme with enhanced retail offerings.
AEI will increase NLA by 16% and rentals by 37%. The proposed AEI will add an additional 10,000sf, or a 16% increase to existing NLA. In 2012, OHSA accounted for about 3.6% and 3% of total revenue and net property income respectively. Post-AEI,
management expects an incremental income of S$2m (+37% increase), translating into a ROI of 8%. Our calculation suggests that this is easily achievable considering the fact that current average rentals are about S$7psf pm, a 30-50% discount to the
prevailing rents in the area.
Maintain BUY and target price of S$2.36 as the loss of income in 2014 will be offset by a pick-up in long-term yields. Our target price is based on our two-stage dividend discount model (required rate of return: 6.9% and terminal growth rate: 2%).
From DBS:
The slow construction pace dragged Yoma Strategic’s
FY13 results but take-up rate and average selling price
(ASP) trumped expectations. ASPs grew 20-30% y-o-y and
5-10% q-o-q. The booming property sector, accelerated
construction and Landmark’s progress lead us to raise
FY14/15F earnings by 60%/40%. Target price raised to
S$0.92 (Prev S$ 0.80) to reflect higher sales, ASP and nonproperty
values. Upgrade to BUY. Telco win or agriculture
developments are potential catalysts.
Sembcorp Marine has secured a rig-building contract
worth US$596m from Noble Corp. It comes with an
option for an additional unit. The rig is due for delivery in
the first quarter of 2016. We believe the jack up order is
backed by the firm charter contract secured by Noble
from Norwegian operator Statoil, which was announced
last week. More significantly, SMM won this contract
from the other finalist - South Korean Daewoo
Shipbuilding & Marine Engineering. This is again a
demonstration of Singapore rigbuilders' competitive
strength in the jack up segment. This latest order brings
SMM's YTD wins to S$2.43bn, forming 49% of our full
year expectation of S$5bn. Maintain Hold, TP: $4.70.
From Maybank KE:
Sarin Technologies: Crisis or Opportunity? Maintain Buy, TP $1.66
SARIN SP | Mkt Cap USD405m | ADTV USD0.2m
DeBeers increased rough diamond prices by about 4% in its May sight.
Rough diamond prices have increased by about 10% this year, while
polished prices for 1-carat diamonds rose by a mere 0.3%. Without
further rise in polished prices, manufacturers face a squeeze on
margins.
Indian manufacturers are expected to maintain cautious manufacturing
levels in 2Q13, and this is also quiet period due to the May summer
holidays. We expect a more subdued demand for traditional equipment,
but we think that this could be compensated by higher GalaxyTM sales.
We believe that the repeated margin pressures faced by the
manufacturers would stimulate motivation to seek higher efficiencies
through long-term investments in technologies. We highlight that the
investment case for Sarin is the structural changes it would bring
forth with its game-changing technologies. Maintain Buy, TP SGD1.66.
Monday, May 27, 2013
Local Brokerages Stock Call 27 May 2013
From UOB KH:
DBS Group Holdings (DBS SP, D05) –
Scaling new heights; more bang for your buck
Last price: S$17.15
Target Price: S$20.80
DBS reported a splendid set of 1Q13 results with growth in both
interest and non-interest income, which finally triggered a rerating
for the stock. DBS generated organic growth through its
nine strategic priorities and has built up regional operations. It
managed to stabilise net interest margin and benefitted from
market-sensitive sources of fee income. Management has raised
its guidance for loan growth for 2013 from 10% to a low
double-digit. Bank Indonesia has recently approved DBS’
proposal to acquire Bank Danamon but limits the deal to a 40%
stake for now. We view the acquisition to be dilutive to earnings
and ROE for two years but would turn accretive in the third
year. The deal is positive over the longer term by increasing
DBS’ exposure to high-growth emerging markets. Maintain BUY
and target price of S$20.80 until we get more clarity on this.
Technically in the near term, the stock needs to hold above
S$16.80 for further upside towards S$18.20/20.40.
Keppel Corp (KEP SP, BN4) –
Relief in strong O&M operating margin
Last price: S$10.91
Target Price: S$12.80
Keppel’s 1Q13 results were within our expectation, but appear
to be below consensus. 1Q13 earnings were sharply lower yoy
as 2012 had booked in exceptionally large property earnings.
Despite this, the strong O&M operating margin of 14% should
lend support to share price. Furthermore, 2013’s contract wins
could surpass expectations. Ytd, Keppel has won over S$2b of
new contracts, surpassing Sembcorp Marine’s. Our top pick in
the sector continues to be Keppel, given better earnings
visibility. We have a target price of S$12.80 to go with our BUY
recommendation.
Technically, the stock may continue its rebound from S$10.44
to test S$11.65.
Ying Li International Real Estate (YINGLI SP, 5DM) –
1Q13 results in line; new strategy to be unveiled soon
Last price: S$0.485
Target Price: S$0.64
Ying Li’s plans to transfer its retail malls into a REIT looks on
track. We estimate the company could rake in 28 cents/share if
Ying Li dilutes its ownership of these retail assets to 30%. Funds
will most likely be redeployed for future opportunities.
Management believes in the long-term growth prospects of
Chongqing and sees several opportunities there. We are excited
about the company’s new CEO, who has deep experience in
China and could implement new strategies. It has also
appointed three new directors to its board, who come with a
wealth of corporate experience. For 2013, Ying Li will recognise
the entire sales proceeds and profits from one of its commercial
projects. This should drive its share price. Our target price is
S$0.64, pegged at a 23.5% discount to our RNAV/share.
Technically, the stock may continue to trend up towards S$0.62
should it be well supported above S$0.48/0.42.
IHH Healthcare- 1Q13: Net profit below expectations; downgrade to SELL.
(IHH SP/SELL/S$1.63/Target: S$1.33)
FY13F PE(x): 49.9
FY14F PE(x): 40.3
Healthy growth from existing operations. IHH Healthcare (IHH) registered 29% and 24% yoy increases in group revenue and EBITDA from its existing operations. This was mainly attributed to higher inpatient admissions and increased revenue intensity
across its hospitals, ramping up of new hospitals and a full three-month consolidation of Acibadem. Mount Elizabeth Novena (MENH) reported a significantly reduced EBITDA loss of RM3m (4Q12: RM16m loss) after cost-rationalisation efforts by management. Occupancy rate is currently at 35% with 116 beds in operation.
MENH to turn EBITDA positive despite low occupancy. We expect MENH to turn EBITDA positive in 2Q13, earlier than expected,due to efforts in streamlining costs. With occupancy is still low at 35%, MENH and MEH are placed under the same management to allow the group to rationalise the two hospitals' cost structures and to consider MENH as an extension of MEH. However, the slow ramp-up in occupancy and lower bed count slightly dampen our outlook for the new hospital. We think the excess capacity may limit improvement in revenue intensity and hurt margins.
Downgrade to SELL; reduce target price to S$1.33. IHH is currently trading at about 50x 2013F PE. We think there is significant execution risk in the near term. Our revised target price of S$1.33 (previously S$1.42) is based on a SOTP model and implies 41x 2013F PE. We downgrade the stock to SELL.
From DBS:
The US markets have stabilized in the last two trading
days. We believe after last Thursday’s 1.8% drop in STI,
this could be an opportunity to accumulate stocks that we
like. Among our Buy calls that underperformed the
market are value unlocking plays - UOL Group, Keppel
Land and Wing Tai; laggards Oil & Gas stocks - Keppel
Corp, Nam Cheong, CSE Global and Ezion; and other
attractive picks - ComfortDelgro, Kreuz and Del Monte.
For the STI, we maintain our view for it to trade along the
14.7x (+0.5SD) 12-mth forward PE that should lift it to
3650 (14.7x FY14F PE) by year end.
1Q13 results for IHH Healthcare in line, forms 18% of
FY13F earnings. EBITDA margins were weaker on start up
costs of new hospital and other operating costs, but
within our expectations. Novena losses continue to
narrow with breakeven expected in FY13. Maintain HOLD
given its relatively rich valuations; TP revised to S$1.55
(Prev S$ 1.38) on higher EV/EBITDA multiple.
4Q13 results for Global Logistic Properties reflect partial
loss of Japan income. Growth track in China accelerated,
Japan and Brazil expanding through its funds. Maintain
Buy, TP S$3.30. We continue to like GLP for its strong
execution track record and anticipate the group’s
acceleration in its growth track to act as a catalyst for
share price performance.
From Maybank KE:
Midas Holdings: Green Shoots Of Recovery; Buy, TP $0.75
MIDAS SP | Mkt
Cap USD464.3m | ADTV USD3.3m
The newly formed China Railway Corp issued
Rmb20bn bonds last Thursday. In our view, it is a necessary move to get China’s
ambitious railway plans back in gear and could potentially result in more
intensive investments in the 2H13.
We continue to like Midas as a major beneficiary
of the investments in China railway sector. Maintain our BUY rating and target
price of SGD0.75.
The bond sales could help to ease the concern on the funding source
for developing China’s rail system.
The RMB20b bonds are
just the first batch of the RMB150b bonds that China Railway is expected to
issue this year. Total investment in the China rail sector YTD also lags behind
the full year investment target of RMB650b due to the restructuring of the
Ministry of Railways. That implies more aggressive fund raisings and investments
in 2H13.
From OCBC:
| Dyna-Mac Holdings: Stay cautious Summary: Dyna-Mac Holdings reported 1Q13 results that were slightly below our expectations. 1Q13 revenue fell by 19% QoQ to S$60.1m, while net profit fell 24% QoQ to S$6.7m. The group’s order-book continued to fall to S$113m (27 Feb-13: $134m), providing cover for under two quarters. To be fair, delays in the award of contracts is quite common in the industry and Dyna-Mac is currently tendering for a number of large projects. Nonetheless, the low order-book still makes Dyna-Mac vulnerable to potential yard under-utilization should contracts be further delayed. After adjusting our model to incorporate the 1Q13 results, our fair value estimate declined to S$0.44 (previously S$0.50). Maintain HOLD. CDL Hospitality Trusts: AEI for Orchard Hotel Shopping Arcade Summary: CDLHT has announced asset enhancement plans for Orchard Hotel Shopping Arcade (OHSA). The AEI will comprise an overhaul of the property facade and existing amenities to enhance its user-friendliness. Scheduled to commence in late 2013, the AEI is expected to complete in 12 months, during which the mall will be closed. A soft opening of the revamped mall is expected by end 2014. The AEI is expected to cost approximately S$25.0m, including construction cost which will be fully funded by debt, estimated disruption costs to the adjoined Orchard Hotel, and the loss of rental income during the period of mall closure. Upon completion of the AEI, OHSA will boast an increased NLA of ~10k sq ft. Incremental rental income of OHSA is expected to be more than S$2.0m on an annualised basis, translating into an estimated gross ROI of more than 8.0%. For now, we maintain our HOLD rating and fair value of S$2.05 on CDLHT. |
Local Brokerages Stock Call 23 May 2013
From OCBC:
OKP Holdings: Ceasing coverage
For
the first quarter of the year, PATMI came down 22.2% YoY to S$2.4m –
below our expectations and consensus estimates – mostly due to margin
pressures from increased subcontracting and labour costs. Looking ahead,
we see softer gross margins in the vicinity of 15%-20% for OKP as it
continues to face significant cost-side pressures from more restrictive
labour regulations from authorities and increased competition to hire
and retain engineers. That said, OKP continues to have a fairly healthy
order book at S$393.5m as at 30 Apr 2013, as the group benefits from
significant experience in public-sector construction and maintenance
projects with a good reputation for on-time delivery. We last rated OKP a
HOLD with a fair value estimate of S$0.46, based on a P/E multiple of
11x applied to FY13F EPS. Due to a re-allocation of internal resources,
we are ceasing coverage on this counter.
Singapore Economy: 2013 GDP growth forecast remains at 1-3%
According
to the MTI, the Singapore economy grew by 0.2% YoY in 1Q13, better than
the street’s expectations of -0.6% growth, but worse than the 1.5%
growth seen in 4Q12. On a seasonally adjusted, annualised basis, the
economy expanded by 1.8% QoQ, compared to the 3.3% growth in 4Q12.
Manufacturing contracted by 12.3% QoQ, reversing the 3.1% growth in
4Q12, largely due to lower output in the biomedical manufacturing and
transport engineering clusters. Construction grew by 16.5%, compared to
4Q12’s 3.9% negative growth, due to a strong rebound in private sector
building activities. Finally, services expanded by 7.9% after 4Q12’s
2.5% rise, driven mainly by the finance and insurance sector. Despite
the stabilisation of external macroeconomic conditions since late last
year, risks to global growth outlook remain. Hence barring downside
risks, the MTI maintains its 2013 GDP growth forecast at 1.0-3.0%.
TEE International: TEE Land lodges preliminary IPO prospectus
TEE
International’s real estate unit TEE Land lodged its preliminary IPO
prospectus with the Monetary Authority of Singapore yesterday. The
property portfolio injected into TEE Land by its parent comprises 24
projects, worth $394.6m as at 30 Nov 2012. Four pre-IPO investors have
collectively subscribed for 4m shares in TEE Land for $4m. TEE’s
managing director of real estate will lead TEE Land as CEO. TEE Land
must still meet several conditions to complete its listing: It needs to
raise at least $20m from its IPO at an issue price of $0.50 or more per
share, and it must have a market cap of $150m or more at the time of the
IPO. Our rating on TEE is currently UNDER REVIEW, pending a change in analyst.
From UOB KH:
1Q13 Results Wrap-Up: A Slow Start To The Year
We remain constructive on the market with a year-end target
of 3,600 for the FSSTI. Our top picks in Singapore are DBS,
Keppel Corp, Suntec REIT, K-REIT, Ezion, First
Resources, Courts, Triyards, Nam Cheong, Silverlake and
Ying Li. We see deeper value in the midcap space, particularly
for stocks with strong operating cashflow and company specific
catalysts.
Global Premium Hotel (GPHL SP, P9J)-
Technical BUY with +27.2% potential return
Last price: S$0.275
Resistance: S$0.35
Support: S$0.23
BUY with a target price of S$0.35 with tight stops placed
below S$0.255. The stock has made a higher low and its 10-
day moving average has crossed above its 35 day moving
average, suggesting its recent retracement towards S$0.25
could be reversed. Its MACD indicator has formed a bullish
crossover and has crossed above its centerline, while its
positive directional indicator appears to be positively placed.
Watch to see if the stock could break above its all-time high
of S$0.305.
Our retail research has a fundamental BUY with a target price
of S$0.34.
KSH Holdings (KSHH SP, ER0) -
Take profit from previous technical BUY
Last price: S$0.605
Resistance: S$0.65
Support: S$0.495
The stock was featured as a technical BUY when it opened at
S$0.475 on 10 May 13. It has since returned 27.4% on
closing prices, with an intraday high of S$0.61 in the last
trading session, which has exceeded the initial target of
S$0.56. Some profits could be taken off the table should the
stock fail to close above S$0.65. Watch to see if its MACD
indicator could form a bearish crossover.
Strategy – Singapore: 1Q13 Results Wrap-Up: A Slow Start To The Year
1Q13 report card. The 1Q13 reporting season ended on a mixed note. 52% of the results were in line with expectations
(57% in 4Q12) but the number of misses rose to 31% in 1Q13 from 23% in 4Q12. A turnaround in trend but largely sector specific. The higher number of earnings misses were a slight disappointment and reversed a trend of earnings improvements since
2Q12, which saw earnings disappointments fell to a low of 23% in 4Q12 before spiking up to 31% in 1Q13.
Disappointments from property and plantations. The major disappointments were relatively sector specific, including property and plantations. The latter’s earnings were dragged by lower CPO prices, rising cost of production and weak CPO production for selective companies. Planters that reported below-expectation earnings include Indofood Agri and Kencana Agri. On the other hand, our key BUY in the plantation sector First Resources exceeded our expectations due to forward selling of CPO in early-12 as well as inventory drawdown. In the property sector, all the large-cap developers including City Developments,
CapitaLand and OUE missed our estimates due to a combination of lower recognition of properties sold and weaker contributions from investment properties/hospitality segment. We have BUY ratings on CapitaLand and OUE whereas City Developments
is a HOLD.
More bank for your buck. The banks delivered a solid set of results. Most notable was DBS which was firing on all cylinders with growth in interest and non-interest income. Management gave a convincing performance, demonstrating its ability to execute
and a sound strategy. In addition, DBS’s NIM edged up slightly by 2bp but NIM for both OCBC and UOB contracted by 6bp. DBS pioneered the floating rate housing loan and probably experienced the pressure from refinancing much earlier, thus explaining the
divergent trend in NIM.
A tale of two land transporters. There was significant contrast in the performance of the two land transport companies. Whilst SMRT continues to be weighed down (primarily on a sharp 67% fall in full-year DPS) by cost pressures and high capex,
ComfortDelGro surprised us with an 8 % yoy rise in 1Q13 net profit. Despite pre-operational start-up costs for the Downtown Line, earnings growth was driven by higher ridership and an improvement in EBITDA margins (+0.5ppt to 20.6%) on lower fuel costs.
Consequently, we upgrade the stock to BUY from HOLD with a DCF-based target price of S$2.32/share.
Steady performance from shipyards. The two shipyards delivered results in line with our expectations but below consensus. A positive takeaway was SMM’s operating margin which recovered to 13.7% (12.9% excluding a large forex claim) in 1Q13 from a
low level of 10.8% in 4Q12. Management still maintains its operating margin guidance of 10-13% for the longer term. Keppel Corp registered a strong O&M operating margin of 14.0% for 1Q13, up from 4Q12’s 12.8% but lower than 1Q12’s 15.1%.
Furthermore, Keppel had started progressive recognition of the first of six semi-submersible rigs for Brazil. Our top pick in the sector continues to be Keppel Corp given better earnings visibility.
Hang up on telcos. SingTel’s 4Q13 disappointed, with core net profit falling 2% yoy. Factors which dragged earnings were falling ARPUs in Singapore and weaker contributions from Bharti. The bright spark was a slight increase in its dividend payout ratio, from
55-70% to 60-75%. We re-iterate SELL with a SOTP-based target price of S$3.54/share. M1 and StarHub’s earnings were broadly within our expectations but we downgraded M1 to HOLD after the strong run-up in share prices. We maintain SELL on StarHub with a DCF-based target price of S$3.82/share.
REIT on; low financing costs to spur accretive acquisitions. The REIT sector performed in line with expectations. The REITs continued to enjoy low refinancing costs, with the likes of Suntec issuing convertible bonds with 1.4% coupon. In light of this, we
see further accretive acquisitions ahead. Our key picks include Suntec REIT, Keppel REIT and CDLH-T.
Commodity disparity. Noble disappointed the market again with losses from its agricultural division due to a delay in harvest in Brazil (owing to rainfall) and the lack of bean inventory in Argentine for its crushing plant due to weak harvest in the last season.
Otherwise, we think 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. Maintain SELL but cut our target price to S$0.92
(from S$1.17 previously). Olam’s 3QFY13 results were in line with our expectations. 3QFY13 EBITDA was relatively flat as lower qoq sales volume was compensated by better net contribution/mt.
Genting Singapore misses expectations. Annualised, GENS’ 1Q13 adjusted EBITDA of S$249.7m (-33.7% yoy) was well below our 2013 forecast of S$1,384m on the back of a below-theoretical win rate of 2.12% (4Q12: 3.0%, 1Q12: 3.4%) despite a 38%
yoy increase in rolling chip volume (RCV) to an estimated S$20.8b. We maintain SELL with a target price of S$1.17 (based on 10x FY13F EV/EBITDA).
Market earnings for 2013F cut after 1Q13 results. We adjusted our market EPS estimates after the reporting season. Post our changes, we forecast market EPS to decline 1.0% yoy in 2013 followed by a recovery of 13.0% yoy in 2014 (previously
+0.1% in 2013F and 12.6% in 2014F). We remain constructive on the market with a year-end target of 3,600 for the FSSTI. We see deeper value in the midcap space, particularly for stocks with strong operating cashflow and company specific catalysts. Our top picks in Singapore are DBS, Keppel Corp, Suntec REIT, K-REIT, Ezion, First Resources, Courts, Triyards, Nam Cheong, Silverlake and Ying Li.
