Local Brokerages Stock Call 21 May 2013

From OCBC:
Telecom Sector: Downgrade to NEUTRAL
All three telcos reported 1QCY13 results that came in within our expectations, with all of them meeting between 25% and 27% of our full-year forecasts. Going forward, other than M1 expecting moderate earnings growth, the other two are guiding for a pretty muted showing this year, with SingTel expecting stable group revenue while StarHub has eased its guidance to low single-digit revenue growth from single-digit previously. Besides the run-up in the telcos’ share prices YTD, which makes the yields less attractive, a more “risk on” approach could see investors switch out of defensive stocks. As such, we downgrade our rating from Overweight to NEUTRAL on the sector. 

Global Palm: HOLD; No catalysts yet
Global Palm Resources (GPR) posted 1Q13 revenue of IDR66.8b, down 33% YoY and 4% QoQ, while reported net profit tumbled 36% YoY to IDR8.3b, meeting 29% and 25% of our full-year revenue and net profit estimates, respectively. While GPR has maintained its new planting target of 300-400ha for this year, it has made a very slow start, planting just 5ha in 1Q13 (versus 166ha in 1Q12) – the lowest new planting since 1Q11. Meanwhile, the outlook also remains muted, given the still-sluggish CPO prices and an impending increase in labour cost (with the upward revision in Indonesia’s minimum wages this year). Until we see fresh progress in its land negotiation and/or acquisition of either new or existing plantations, we opt to keep our HOLD rating and S$0.17 fair value (based on 10x FY13F EPS).

Keppel Corporation: Sells 6.7% of Keppel REIT at S$1.555/unit
Summary: Keppel Corporation (KEP) announced that its wholly owned subsidiary, Keppel Real Estate Investment Pte Ltd, has entered into a sale and purchase agreement with Goldman Sachs (the placement agent) for the sale of 180m units of Keppel REIT (6.7% of total issued units of KREIT) for S$1.555/unit. The aggregate cash consideration of S$279.9m took into account KREIT’s last transacted price of S$1.605/unit as at 20 May 2013 and the 30-day VWAP of S$1.5129. This is at a premium to the book value and NTA/share of S$1.31 and S$1.28, respectively, as at 31 Mar 2013. Upon completion of the sale (expected 27 May), KEP’s interest in KREIT remains substantial (from 58.2% to 51.5%). Recall that KEP earlier rewarded shareholders with dividend in specie of KREIT units; announced on 24 Jan 2013 when KREIT’s share price was S$1.37. Maintain BUYon KEP with S$12.68 fair value estimate.

ComfortDelGro – Addition to Australian operations
ComfortDelGro announced yesterday that it will acquire a privately-held bus company, Driver Group Pty Ltd, for A$22m. This acquisition will add five long-term, metropolitan bus routes in the Eastern suburbs of Melbourne to ComfortDelgro’s Australian operations in Victoria, and increase its fleet to 420 buses from 378. Assuming regulatory approval, this deal will be completed in Jul 2013. While the deal is relatively smaller compared to its previous acquisitions in Australia and will not have a material impact on its earnings in FY13, it demonstrates management’s intent to actively grow its overseas operations and we view this positively. However, valuations for ComfortDelgro remain expensive in our view and we maintain HOLD on the counter with an unchanged fair value of S$1.95. 

From UOB KH:
Tiger Airways- Recovery in Singapore but associates
could still be a drag on earnings. (TGR
SP/SELL/S$0.66/Target: S$0.61)
Maintain SELL. We lower our target price to S$0.61 (previously
S$0.63) as book value was lower than expected. While there is
a recovery in Singapore, we believe its regional cubs still face a
difficult operating environment and as such could still dilute
earnings. We continue to value Tiger Airways at 1.4x FY14F P/B
(excluding perps proceeds and no dilution).

SGX (SGX SP, S68) -
Technical SELL with +6.5% potential return
Last price: S$7.70
Resistance: S$7.85
Support: S$7.20
SELL with a target price of S$7.20 with tight stops placed
above S$7.85. The stock has a follow-through sell after it
formed a bearish engulfing pattern on 16 May 13 and a break
below its mid Bollinger band could see more selling pressure.
Its 21-day Stochastics indicator has formed a bearish
crossover and its RSI has also turned down below a reading
of 60. Watch to see if the stock could continue to be
supported near its rising trendline.

Hutchison Port Holdings Trust (HPHT SP, NS8U) -
Technical BUY with +12.6% potential return
Last price: US$0.835
Resistance: US$0.94
Support: US$0.80
BUY with a target price of US$0.94 with tight stops placed
below US$0.80. The stock is trading above its 200-day
moving average and has been supported near its lower
Bollinger band and a break above its upper Bollinger band is
likely to see further upside. Its Stochastics indicator has
formed a bullish crossover and its RSI indicator has turned up
above a reading of 40. Watch to see if its positive directional
indicator (DI) could continue to trend above its negative DI.
Our institutional research has a fundamental BUY with a
target price of US$0.96.

Logistics Holdings (LHO SP, 5CP) -
Technical BUY with +27.2% potential return
Last price: S$0.22
Resistance: S$0.28
Support: S$0.187
BUY with a target price of S$0.28 with tight stops placed
below S$0.190. On its hourly chart, the stock appears to be
reversing its prior downtrend as prices are trending above its
20- and 50-day period rising moving average. Its Stochastics
indicator has formed a bullish crossover and its RSI indicator
has turned up above a reading of 40. Watch to see if its
MACD indicator could form a bullish crossover.

From Maybank KE:
SIA Engineering: Worth More Than The SOTP Now ; Up to BUY, TP $6.16
SIE SP | Mkt Cap USD4.4b | ADTV USD1.5m
We  upgrade  SIA Engineering to BUY (from Hold) as we believe that the
company is a beneficiary of SIA’s constant re-jig of business models.
Collectively,  SIA,  SilkAir  and  Scoot have 143 aircraft on order as
compared  to  their  current  combined  fleet  of 127 aircraft, which is a
reflection of the future growth in MRO work for SIAEC.
We  believe that there is latent value in the JVs held by SIAEC, which
could  be  unlocked with a separate listing. In particular, we are bullish
on  the  outlook  for  one  of  its  JVs  with  Rolls  Royce, SAESL, which
specializes in the repair and overhaul of Trent engines.
Upgrade to Buy, TP of SGD6.16 based on SOTP.  

From DBS:
Global Logistic Properties is scheduled to release its 4Q13
results on Thursday, 23 May. We estimate the group to
achieve core net profit (before revaluation and divestment
gains) of US$70-75m for 4QFYMar13, lower than a year
ago and reflecting the impact of asset divestment into its
J-REIT. Post divestment, GLP’s balance sheet will be lowly
leveraged, putting it in a good position to reinvest for
future growth. Outlook remains positive in China.
Meanwhile in Japan, rents are inching up, with prospects
of higher capital values. Maintain BUY with higher target
price of S$3.31 (Prev S$ 2.93) as we roll over valuation to
FY14.

Ying Li’s 1Q13 revenue recognition was slow as expected,
but margins were above expectations. Four blocks of Int’l
Plaza have been structurally completed and are expected
to be delivered in 2013/2014. Phase V of Int’l Plaza
(office) will launch pre-sales in June. Maintain BUY with
S$0.55TP.