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:

Pushing Ahead With Property REIT Listing

SPH will pay a special DPS of 18 S cents from the cash proceeds it stands to

receive from the sale of Paragon and Clementi Mall to SPH REIT. Overall,

SPH REIT’s IPO listing is neutral to our SOTP valuation for SPH, but SPH’s

earnings and dividend yields are likely to be reduced by about 7%. Maintain

HOLD with our target price unchang ed at S$4.50. We recommend entry at

S$4.20 and exit at S$4.80.