Local Brokerages Stock Call 14 June 2013

From UOB KH:
City Developments (CIT SP, C09) –
Technical BUY with +5.3% potential return
Last price: S$9.78
Resistance: S$10.30
Support: S$9.65
BUY with a target price of S$10.30 with tight stops placed
below S$9.65. The stock has retraced a little closer to its
previous support on 4 Jun 12. Its 14-day RSI has a reading of
18.1, which suggests the stock is oversold. Its Stochastics
indicator looks poised to form a bullish crossover in the
oversold region and could trend up. Watch to see whether the
stock will move away from its lower Bollinger band towards
its declining 15-day moving average.
Our institutional research has a fundamental HOLD with a
target price of S$12.19.

CNMC Goldmine Holdings (CNMC SP, 5TP) –
Technical BUY with +32.2% potential return
Last price: S$0.31
Resistance: S$0.41
Support: S$0.285
BUY with a target price of S$0.41 with tight stops placed
below S$0.28. The stock is trading near its previous support
level on 19 Apr 13 and is breaking above its downward
sloping resistance line. Prices have also rebounded from its
lower Bollinger band. Its MACD indicator appears to hook up
and its RSI has correspondingly rebounded from a level of
40. Watch to see whether the stock could move above its
declining 150-day moving average, which is near S$0.355.

Civmec (CVL SP, P9D) -
Technical SELL with +20.9% potential return
Last price: S$0.885
Resistance: S$1.03
Support: S$0.70
SELL with a target price of S$0.70 with tight stops placed
above S$0.955. The stock has gapped down to break below
its previous low on 5 Jun 13, with its declining 50-day moving
average acting as a resistance. A dead cross has formed as
well. Its Stochastics indicator has formed a bearish crossover
and is turning down. Watch to see whether its MACD indicator
could form a bearish crossover below its centreline.

S’pore Telecommunications- Updates from India.
(ST SP/HOLD/S$3.60/Target: S$3.87)
FY14F PE(x): 16.4
FY15F PE(x): 15.1
Finally achieving pricing stability. The take-up for the auction of the 2G spectrum conducted in Nov 12 was poor due to high reserve price. Less than half of the 2G spectrum that was affected by the corruption scandal has been taken up. The total number of players has been reduced from 14 to 10 with the exit of Etisalat, STel, Loop and MTS. Pricing stability has been restored. ARPM has stabilised at about Rs0.42/min for the past four quarters, while ARPU has rebounded 4.3% qoq to Rs193/month.

Guidance for FY14. SingTel guided revenue on a group basis to be stable. It expects low single-digit growth for its Singapore mobile business and a mid single-digit decline for its Australian mobile business. Group EBITDA is expected to grow at low single digit driven by Group Consumer. Group Digital Life is expected to incur start-up losses. SingTel expects dividends from mobile associate to continue to grow.

Maintain HOLD. Our valuation for SingTel is reduced slightly from S$3.94 to S$3.87 based on the sum-of-the-parts (SOTP) methodology. The lower target price is due to the correction in share price for Bharti and the recent depreciation of the Indian rupee and the Philippines peso.

From DBS:
We believe that STI’s correction has touched a short-term low
off the 3100 level that coincided with the 13.1x (-0.5SD) 12-
mth forward PE level. The Singapore McClellan short-term
market breadth indicator fell to -58 yesterday, which is the
lowest reading since August 2011 and near to the extreme
oversold reading of -70. This adds to the list of oversold
technical indicators that includes the stochastic and RSIs.
Scope for an initial rise to c.3200.
The decline in SREITs should also stabilize heading into next
week’s FOMC meeting and as more of them have fallen
closer to their respective Nov12 lows that opens up trading
Buy opportunities. Our analyst’s picks are MCT, MGCCT,
FCOT, Cache, AREIT and MIT.

Local Brokerages Stock Call 13 June 2013

From OCBC:
Midas Holdings: Metro industry gaining momentum
Summary: Midas Holdings’ JV company NPRT recently secured three metro contracts amounting to ~CNY2.45b (assuming a 70% stake for one of the contracts won together with its consortium partners) within a span of two weeks. We believe this highlights the fast growing momentum of China’s metro industry. As Midas is also a key supplier to NPRT, we expect it to benefit positively from this. Despite the share of loss of NPRT to Midas’ FY12 and 1Q13 financials, we believe that the situation would improve from 2H13. Meanwhile, Midas’ management has also set its sights on growing its exports business, such as to the Russian railway market. We maintain our BUY rating and S$0.54 fair value estimate on Midas as we are still sanguine on its long-term outlook, but believe that the major re-rating catalyst would have to come from the resumption of new high-speed train car tenders from China. 

From Maybank KE:
United Engineers: Bite the Bullet; Cut to SELL, TP $1.86
UEM SP | Mkt Cap USD651.5m | ADTV USD0.9m
Downgrade to SELL and lower our TP to SGD1.86, inclusive of WBL acquisition costs, and apply a larger discount on UE’s property earnings.
UE has proposed a 1-for-1 renounceable rights issue to raise SGD490m to reduce its borrowings for its recent acquisition of WBL and increase UE’s financial flexibility. We think the rights issue is clearly an aggressive action by the major shareholders to force the minority shareholders’ hand.  
A total of 326.6m new shares will be issued with gross proceeds of SGD490m. Major shareholders such as OCBC and the Lee Family have agreed to irrevocably undertake and subscribe for the rights issue. 

From UOB KH:
Cache Logistics Trust (CACHE SP, K2LU) –
Technical BUY with +7.3% potential return
Last price: S$1.23
Resistance: S$1.32
Support: S$1.20
BUY with a target price of S$1.32 with tight stops placed
below S$1.19. The stock is trading near its prior resistanceturned-
support level near S$1.20 and prices managed to
close near to its rising 250-day SMA. Its Stochastics indicator
looks poised to form a bullish crossover in the oversold region
and could trend up. Watch to see whether there is a follow
through of its potential bullish hammer pattern.
Our institutional research has a fundamental BUY with a
target price of S$1.52.

Ascendas REIT (AREIT SP, OR5) –
Technical BUY with +11.7% potential return
Last price: S$2.30
Resistance: S$2.57
Support: S$2.20
BUY with a target price of S$2.57 with tight stops placed
below S$2.20. The stock is trading near its prior resistanceturned-
support level near S$2.20. Its Stochastics indicator
has formed a bullish crossover in the oversold region and
could trend up. Its RSI has correspondingly rebounded from a
level of 20. Watch to see whether its 50-day moving average
could hook up near its 200-day moving average instead.
Our institutional research has a fundamental BUY with a
target price of S$2.86.

Jardine Cycle & Carriage (JCNC SP, C07) -
Take profit on previous technical SELL
Last price: S$41.47
Resistance: S$49.00
Support: S$40.50
The stock was featured as a technical SELL on 30 May 13
when it opened at S$46.45 and did not stop out above
S$49.00. The stock has since returned 10.7% on closing
prices. Some profits could be taken off the table as the stock
appears to have rebounded near S$40.50. Watch to see if the
stock could close the falling gap created two trading sessions
ago.

 

Local Brokerages Stock Call 12 June 2013

From OCBC:
Starhill Global REIT: Another positive development
Summary: Starhill Global REIT (SGREIT) announced that the rent review for the Toshin master lease has been concluded, and that a renewal rent at 6.7% higher than the prevailing rate has been secured. This is consistent with our 29 Apr report that SGREIT may again benefit from rental upside following the completion of the review process. We now factor in the increased rents in our forecasts but lower our fair value marginally to S$1.00 on higher risk-free rate (S$1.05 previously). However, we continue to like SGREIT for its growth potential, strong financial position and compelling valuations. For FY13, SGREIT looks set to gain from continued strength from its Singapore portfolio, incremental income from its newly-acquired Plaza Arcade and a 7.2% rental escalation from its Malaysia master leases in Jun. We maintain BUY on SGREIT. Key risks include weaker JPY/AUD and negative impact from a potential CPU conversion.

Tiger Airways: Time for a tiger
Summary: In light of its more than 6% price correction, we are reiterating our BUY rating on Tiger Airways (TGR) with an unchanged fair value estimate of S$0.79 as we believe prospects remain positive for the counter. Its recent May operating statistics revealed its eighth consecutive month of passenger traffic growth for TGR SG, and passenger load factors during the period have also remained fairly resilient, which demonstrates its effective capacity management. In addition, we are hopeful for a better showing from its associate airlines given the propensity for travel in the coming months for Indonesia and the Philippines. On a broader scale, the industry dynamics, namely growth in the Asia-Pacific region, remains conducive for budget carriers as consumers become more affluent and appetite for air travel increases. 
 
Midas Holdings: JV NPRT secures CNY1.26b metro contractSummary: Midas Holdings (Midas) announced that its 32.5%-owned JV Nanjing SR Puzhen Rail Transport (NPRT) has clinched a CNY1.26b metro contract. This is for the supply of 33 train sets (or 198 train cars) for the Shenzhen Metro Line 3 project. However, delivery is scheduled only from 2015 to 2016. Given that this is the third contract secured by NPRT in two weeks, we believe this highlights the growing momentum of China’s metro industry. In our view, this may also lead to future contract wins for Midas given that it is a supplier of aluminium extrusion profiles for NPRT. Maintain BUY on Midas, with an unchanged fair value estimate of S$0.54, pegged at 1.1x FY13F P/B. 

From DBS:
STI was affected by the sell-down in developing Asian
economies of Indonesia, Thailand and Philippines that
dragged down the Jardine Group of index component stocks
yesterday. There is still a little weakness from the region that
can weigh on the STI but not much in the short-term.
Firstly, China market resumes trading tomorrow, which is
likely to be a down day given the weaker-than-expected data
releases over the weekend. Secondly, the Hang Seng Index
still has a little more downside but should find good support
and has a better rebound at about 21000, which is less than
400pts from yesterday’s close. 400pts pale in comparison to
the 2155pts decline since May 20th.
For the STI, while the downtrend resumes with yesterday’s
move below last Friday’s low, we maintain our view that it
should hold above 13.1x (-0.5SD) 12-mth forward PE at
3100, likely around 3150.

Our analyst raises Genting HK TP to US$0.61 from US$0.55.
Slated for listing in 3Q13, Travellers is valued at US$8.3bil.
Travellers is proposing to raise US$416mil to fund RWM
Phase 3 expansion and Manila Bayshore development by
2017. Based on GENHK's diluted stake of 44.3%, Travellers’
implied valuation alone will dwarf GENHK’s market cap,
which means its other businesses (NCL, SCL) are thrown in for
‘free’.

From UOB KH:
Singapore Strategy- “Yield Impact” From Change In Govt Bond Rate
We analyse the impact of a change in the 10-year Singapore government bond rate on yield stocks and conduct a sensitivity test on target prices.

Yield stocks tumble but not equally. A rise in sovereign bond rates has led to a decline in yield instruments. In Singapore, the benchmark 10-year Singapore government bond (10Y SGS) rate has risen by 64bp to 1.94% since March. Correspondingly, 15 stocks in our yield universe have seen their yields rise by a greater quantum than the Singapore government bond rate. The bulk of these are REITS and telcos. Ascendas REIT and Sabana REIT stand out as having declined the most with their respective yields rising by 124bp and 106bp respectively.

SATS (SATS SP/HOLD/TP: S$3.40) has declined the least within the yield universe as its yield has risen by only 15bp vs the risk-free rate of 64bp. This is followed by SIA Engineering (SIE SP/HOLD/TP: S$5.20). This could be due to the fact that both
stocks are in net cash positions. ST Engineering (STE SP/HOLD/TP: S$4.50) yields have risen by 81bp and thus offer the best upside potential if bond yields stabilise. The underperformance vs SATS and SIE is due to its relatively lower cost of equity as a
lower discount rate will be more sensitive to changes in the risk-free rate. STE is now our top pick in the sector.

REITs have experienced the sharpest correction amongst the different sectors, with average yields falling by 90bp vs an average 75bp fall for all the yield-stocks under coverage. The fall is also more severe than the 64bp correction for 10Y SGS.
Within the SREIT sectors, the correction has been most severe for industrial REITs, with AREIT and Sabana REIT the worst hit as yields fell by 124bp. There may be near-term support for oversold industrial REITs such as Ascendas REIT (AREIT SP/BUY/TP: S$2.86) and Mapletree Industrial Trust (MINT SP/BUY/TP: S$1.75) while ParkwayLife REIT (PREIT SP/HOLD/S$2.70) may be vulnerable to further selldown.

SingTel, StarHub and M1 have corrected 8.6%, 14.1% and 15.1% respectively from their recent peaks. The correction for yield plays offers us an opportunity to accumulate telcos given stable yields and defensive qualities. They generate strong free cash
flow and have low gearing. We recommend accumulating M1 (M1 SP/BUY/TP: S$3.72) and StarHub (STH SP/BUY/TP: S$4.70) due to their more attractive dividend yields.

From Maybank KE:
SMRT Corp: Earnings Weakness Not Priced In; Sell, TP $1.00
MRT SP | Mkt Cap USD1.7b | ADTV USD1.8m 
Maintain Sell with TP of SGD1.00. With structurally higher leverage and poor dividend yield support, we argue that SMRT should de-rate structurally from its historical levels. The stock of SMRT currently trades at 25X FY14E P/E and yields merely 1.7%.
We have 3 key concerns on the stock: 1) Structurally higher leverage, 2) Fare revenue and OPEX mismatch and 3) Lack of CAPEX visibility. 

Local Brokerages Stock Call 11 June 2013

From OCBC:
CapitaLand Limited: Expanding serviced residence presence
Summary: CapitaLand (CAPL) announced yesterday that it has secured a contract to manage a serviced residence in Manila, Philippines. We note this is the sixth contract acquired over the last month by its serviced residence unit, the Ascott Ltd (Ascott). We note Ascott has been actively expanding its presence (an impressive 13% CAGR of units owned/managed since 2000) and is the world’s largest international owner-operator with 31,770 units in 78 cities as at end 1Q13. We see this continued growth extending its competitive edge in terms of scale and branding and, with about S$0.9b of assets under development (on an effective stake basis), it enjoys a good pipeline for capital recycling ahead. We continue to favor CAPL for its diversified real estate portfolio across asset classes, its strong balance sheet and management focus on improving shareholder ROE. Maintain BUY with an unchanged fair value estimate of S$4.29 (20% discount to RNAV).

Karin Technology: Dropping coverage
Summary: Our recent conversation with Karin Technology’s (Karin) management revealed that its Components Distribution business has continued to pick up momentum. This is due to the proliferation of lower-end smartphones in China, resulting in stronger distribution volume of connectors used in these smartphones for Karin. Management is also focusing on growing its higher-margin IT Infrastructure segment. This has been boosted by robust demand for network security solutions and enterprise software products. Meanwhile, we expect Karin’s Consumer Electronics Products segment to remain as its largest revenue contributor, as Apple is still one of the most dominant players within the mobile devices space despite growing concerns over slowing iPhone sales. While we like Karin’s solid dividends payout track record as a means of rewarding its shareholders, we are CEASING COVERAGE on the stock due to a reallocation of resources and a lack of trading liquidity in its shares. 

From UOB KH:
Sarin Technologies (SARIN SP, U77) –
Technical BUY with +9.3% potential return
Last price: S$1.46
Resistance: S$1.70
Support: S$1.40
BUY with a target price of S$1.70 with tight stops placed
below S$1.38. The stock appears to have rebounded above
its lower Bollinger band and is still trending above its rising
75-day moving average. Its Stochastics has formed a bullish
crossover in the oversold region and could trend up. Watch to
see whether its MACD indicator could also form a bullish
crossover above its centreline.

Dukang Distillers Holdings (DKNG SP, GJ8) –
Technical SELL with +15.7% potential return
Last price: S$0.605
Resistance: S$0.65
Support: S$0.51
SELL with a target price of S$0.51 with tight stops placed
above S$0.655. The stock appears to form a tweezer top and
it appears that there was a follow through sell after the
potential bearish doji was formed on 7 Jun 13. Its Stochatics
indicator has formed a bearish crossover and could be turning
down. Watch to see whether its MACD indicator forms a
bearish crossover as well.

Innopac Holdings (INN SP, I26) -
Technical SELL with +20.3% potential return
Last price: S$0.182
Resistance: S$0.225
Support: S$0.145
SELL with a target price of S$0.145 with tight stops placed
above S$0.19. A break below S$0.18 is likely to see more
selling pressure. The stock appears to be resisted by its mid
Bollinger band and its 20-day moving average has formed a
dead cross with its 50-day moving average. Its ADX has a
reading of 31.9 which looks set to rise as its negative
directional index could also rise correspondingly. Watch to
see whether its MACD indicator would continue to trend
below its centreline.

Ascendas REIT- Oversold on interest rate concerns. Upgrade to BUY.
(AREIT SP/BUY/S$2.31/Target: S$2.86)
FY14F DPU Yld (%): 6.2
FY15F DPU Yld (%): 6.7
Sharpest share price correction of 19% from its recent 3-month high, the largest drop amongst the S-REITs under coverage, and is substantially higher than the 11% correction for the property REITs index (FSTREI).
Valuations looking attractive. Forward yield of 6.7% is attractive relative to large-cap industrial peers (MINT: 7.0%, MLT:6.3%) while AREIT is trading at 120bp discount to office REITs forward yield of 5.5%. P/B of 1.2 for AREIT is lower than the 1.3 for large-cap industrial REITs.
Upgrade to BUY (from HOLD) with an unchanged target price of S$2.86, based on Dividend Discount Model (required rate of return: 6.8%, terminal growth: 2.0%). 

From Maybank KE:
Lian Beng Group: Ready For A Ground Breaking Year; Upgrade to Buy, TP$0.68
LBG SP | Mkt Cap USD221.0m | ADTV USD1.0m
 Upgrade to BUY with a revised TP of SGD0.68, indicating upside of 30%. At current levels, Lian Beng is trading at 3.1x FY14F P/E, verses peers at between 5x and 7x P/E. We peg Lian Beng construction earnings at 6x, on par with its construction peers.
We caught up with Lian Beng’s management for updates on ongoing construction and property launches, and are now convinced that FY5/14 will be a record breaking year with earnings surpassing its 2012 peak of SGD51.4m.
The recent Poh Lian construction scandal offered Lian Beng the opportunity to take-over the Goodwood Residence construction contract, which is scheduled for completion in October 2013. Lian Beng’s orderbook currently stands at SGD1.2b.

From DBS:
SREITs - Our analyst believes that fear about the impact of
rising bond yields on S-REITs is an over-reaction at this
point as our economists do not expect QE to taper off
anytime soon. Over the medium term, a rise in long bond
yields is likely to be more gradual than abrupt and S-REITs’
continued ability to grow distributions (estimated at 4.0%
y-o-y) is a compensating factor. SREITs’ yield spread of
3.9% based on current share prices have factored in long
bond yields of > 2.5% and the impact from higher interest
cost is manageable at < 3%. But we are watchful of
translation losses from currency swings as the INR, AUD &
Yen weakened against SGD although we note that most
companies have taken hedges. We like MGCCT (BUY, TP
S$1.22), MCT (BUY, TP S$1.53), FCOT (BUY TP $1.69) and
Cache (BUY, TP S$1.47) for their better than peers’
growth prospects. We have also upgraded A-REIT (BUY,
TP S$2.60) and MINT (BUY, TP S$1.63) to Buy from Hold
on valuation grounds.

Data released by Malaysian Palm Oil Board (MPOB)
revealed a flat May13 palm oil output of 1.384m MT that
is 10% below our forecast. As at end May13, China’s
port-based palm oil inventory further expanded by 9% mo-
m to 1.386m MT. Our analyst believes the persistently
high port-based palm oil inventory is a strong indication
that China’s palm oil imports will probably remain flat
ahead of this year’s mid-Autumn festival. Hence, subject
to stronger exports elsewhere, we expect Malaysian palm
oil inventories to pile up again from here (to 1.825m MT
in Jun13) and peak in Dec13 (to 2.14m MT). CPO prices
are likewise expected to remain under pressure for the
remainder of the year. We are currently reviewing our
CPO price forecasts with downside bias and generally
expect planters to continue to underperform regional
indices. For the Singapore CPO stocks, our analyst
currently has HOLD ratings for Bumitama Agri (TP: $1.12),
Indofood Agri (TP: $1.14) and Wilmar Int’l (TP: $3.72)
except for First Resources (Buy, TP: $2.14). 

Local Brokerages Stock Call 10 June 2013

From OCBC:
Golden Agri-Resources: Modestly firmer CPO boost
Summary: Golden Agri-Resources (GAR), being one of the largest palm oil plantation owners in the world, should benefit from the recent rebound in CPO (crude palm oil) prices to MYR2450/ton; we note that there is a strong historical correlation of nearly 0.7 between CPO prices and GAR share price. While the general outlook for commodities is still uncertain (as China’s economic growth continues to sputter along), we believe that headwinds appear to be dissipating. Furthermore, management remains fairly upbeat about its prospects as it continues to expand its integrated operation capabilities to benefit from the firm industry outlook. Maintain BUY with an unchanged S$0.63 fair value (based on 12.5x FY13F EPS).

ASL Marine: Ceasing coverage
Summary: Among the various offshore and marine stocks, ASL Marine (ASL) is one of the counters with a more diversified business model. Its shipbuilding operations accounted for 46% of gross profit in 9MFY13, ship-repair and conversion accounted for 22%, while ship-chartering contributed 32%. The group expects the outlook of the offshore and marine industry for this year to be “good”, but margins may be impacted by stiffer competition from Chinese shipyards. The long-term future of ASL looks bright, but more time would likely be needed for significant earnings growth and a re-rating of the stock. In particular, the liquidity of the stock is relatively low, partly due to the free float of ~37.8%. We last rated ASL a Buy with a fair value estimate of S$0.86. Due to a re-allocation of internal resources, we are ceasing coverage on this counter. 
 
Swiber Holdings: More work coming up?
Summary: According to Upstream, PEMEX is preparing to begin a bid process that aims to offer a contract to deliver and install four Ayatsil platforms. The group is in the pre-qualification phase for the contract, and heavy-lift contractors such as Saipem, Heerema and Swiber Holdings are said to be interested. The entire package is estimated to be worth ~US$300m. Swiber recently saw its share price run up about 23% from 14 May (pre-1Q13 results announcement) to its close on Friday, after we upgraded our rating from Hold to Buy. However we still see an upside potential of about 12% over a one-year time frame. Maintain BUY with S$0.86 fair value estimate.

From UOB KH:
Suntec REIT (SUN SP, T82U) –
Rotational play within high-yield stocks
Last price: S$1.71
Target Price: S$2.27
We do not believe the yield plays have run the full course.
Despite worries that interest rates could creep up, we see
selective upside in REITs that have either lagged or have
specific catalysts. The REIT yield spread remains attractive and
will remain attractive even with a further rise in government
bond yields. Yield spreads for S-REITs also remain the most
attractive regionally. In this space, we see superior investment
opportunities in the office segment presented by the yield gap
between office REITs and physical office transactions. We
expect the yield gap to narrow as positive rent reversions gain
momentum and growth expectations start building up with a
turnaround in office rentals. Valuations are attractive at 0.9x
P/B for Suntec, one of the lowest among large-cap REITs.
Forward yields of 5.2% are also attractive. We have a target
price of S$2.27.
Technically, the stock is likely to be supported above S$1.65 for
further upside towards S$1.88.

Overseas Union Enterprise (OUE SP, LJ3) –
OUE REIT and special dividend in sight
Last price: S$2.95
Target Price: S$3.63
OUE H-Trust is imminent with Mandarin Orchard and Mandarin
Gallery confirmed as initial assets. The properties will be
divested to OUE H-Trust at a minimum price of S$1,705m,
comprising gross cash proceeds of S$$1,359.5m and OUE HTrust
units worth S$345.5m. The listing is expected to take
place in 3Q13. We estimate a special dividend of 6-10%,
assuming OUE distributes at least 30-50% of the proceeds. OUE
is expected to retain a 30% stake in OUE H-Trust. OUE’s
gearing will improve to 14.8% post-listing of OUE H-REIT from
62.1% currently. OUE also confirmed that Mr Chong Kee Hiong,
the former CEO of The Ascott Limited, will be the CEO of OUE HTrust.
This choice should be viewed favourably by the market as
he has immense experience in the hospitality industry. We have
a BUY recommendation on OUE with a target price of S$3.63,
pegged at 20% discount to our RNAV. OUE is trading at a steep
35% discount to its RNAV.
Technically, the stock has retraced from S$3.20 and could be
supported near S$2.85 for further upside.

First Resources (FR SP, EB5) –
Quality laggard; strong production growth
Last price: S$1.845
Target Price: S$2.35
We also favour laggard stocks with potential catalysts in the
next 12 months. Within this bucket, we like First Resources for
its hands-on management team, young age profile and
efficiency. It has a balanced age profile with 56% being
immature and young areas, which enables it to post strong
production growth on top of its good earnings base built on its
44% prime production areas. The expectation of strong
production growth will help it mitigate CPO price volatility. Also,
it is likely to post better-than-peers’ CPO average selling price
due to its forward selling activities. We maintain BUY with target
price of S$2.35, based on 14x 2014F PE.
Technically, the stock is likely to be supported above S$1.65 for
further upside towards S$2.10.

Overseas Union Enterprise- OUE REIT and special dividend in sight.
(OUE SP/BUY/S$2.95/Target: S$3.63)
FY13F PE(x): 28.3
FY14F PE(x): 22.5
OUE H-Trust (OUE Hospitality Trust) imminent with Mandarin Orchard (S$1,190m) and Mandarin Gallery (S$540m) confirmed as initial assets. The properties will be divested to OUE H-Trust at a minimum price of S$1,705m (maximum 1.4% discount to
valuations of S$1,730m), comprising gross cash proceeds of S$$1,359.5m and OUE H-Trust units worth S$345.5m. The listing is expected to take place in 3Q13.
Gearing to improve to 14.8% post-listing of OUE H-REIT from 62.1% currently. The lower gearing will provide opportunities for OUE to leverage on its balance sheet to pursue development projects across geographies and property segments.
Maintain BUY, unchanged target price of S$3.63/share, which is pegged at a 20% discount to our RNAV of S$4.54/share. We leave our RNAV unchanged pending confirmation of the successful listing of the hospitality REIT. OUE is trading at a steep 35% discount to its RNAV.

From Maybank KE:
We continue to like the rigbuilders as we see mispricing in the stocks. We have BUY ratings for the duo, but our preference is for SMM (Buy, TP SGD5.40) over Keppel (Buy, TP SGD12.50) for its (1) higher earnings growth profile, (2) better revenue coverage and (3) relative underperformance..
Rig ordering cycle is still on an uptrend. The surprise upside in jackup orders in the first half would only serve to boost the impending cycle. Next in play would be the return of more semisub orders following heightened deepwater activities. We argue that despite the impending competition, rig prices would hold up and even rise in the next 3 years.
We expect margins to trend up (albeit at a moderate rate), not decline as expected by consensus. Better product mix, operating efficiency and incremental price increases could soften risks from execution of Brazil orders. The release of risk contingencies taken upfront at later stages could also add to margin upside.


From DBS:
We believe that STI’s correction that started from May 22 has
ended at 3184 last Friday after US’s May job data alleviate
concerns about an imminent cut back in FED stimulus. At the
same time, STI’s forward PE valuation has now fallen below
the 13.9x (average) 12-mth forward PE level at c.3287 and is
a ‘mere’ 80pts away from touching the 13.1x (-0.5SD) 12-
mth forward PE level at c.3100, which makes local blue chips
attractive. . The rebound has the potential to reach about
3300 eventually with immediate resistance at 3225.
Defensive, yield and interest rate sensitive stocks that rocked
the STI lower in the past 2-3 weeks are likely to lead the index
rebound. SingTel, OCBC, DBS, UOB, Jardine Matheson, HK
Land, Capitaland and GLP are the 8 component stocks that
each had at least a 10pt negative impact on the STI in the
current sell-down.

DBS Research issues a thematic report on Myanmar. Despite
scepticisms and multiple challenges, Myanmar’s sweeping
reforms have resulted in drawing new aids, more visitors and
higher interest to trade and investment in the country.
Foreign direct investments (FDIs) have reportedly jumped
>40% to US$1.4bn in FY2013 while tourist arrivals have
surged 54% to 1m. ADB projected that Myanmar GDP
expanded >6% in FY13 and could grow 7-8% p.a. over the
decade. Beneficiaries are Yoma, Interra Resources, Ezion and
Amara while potential beneficiaries are Yoma, Tiong Seng
and SingTel