Local Brokerages Stock Call 12 April 2013

From DBS:
Del Monte Pacific - Initiate coverage with a BUY rating
and target price of S$0.97
We initiate coverage of Del Monte Pacific with a BUY rating
and target price of S$0.97, offering >30% total return,
including 3.3% yield. The stock presents an opportunity for
investors to leverage on robust growth of the Philippines
economy. We are projecting 25% earnings CAGR over FY12-
15F, supported by: (i) rising domestic sales driven by its
branded products and larger distribution network; (ii)
continued growth of the S&W brand in the Asia Pacific region;
(iii) expiry / revision of long term supply contracts to lift
margins in FY15F; (iv) expiry of PET toll packing contract
in 3Q14, with potential to improve margins with new
contracts; and (v) cost savings from its waste-to-energy
project. Rerating catalysts include better trading liquidity
and continued earnings growth.

Ezra posted 2QFY13 recurring net loss of US$2.4m
compared to our expectation of a US$3m net profit.
Results were slightly below expectations in what is usually
a seasonally weaker quarter. Revenues were largely in line
at US$247m (17% growth) but EBIT margin of 3.4%
came in below our forecast of 4%, as the subsea
operations are still being ramped up. Separately, the
group reported US$120m in new contract wins across its
subsea services and offshore chartering segments. Will
provide more details after the analyst briefing today. We
currently have a BUY call with a target price of S$1.58.

From CIMB:

Telco - Overall

Singapore visit takeaways

UNDERWEIGHT - Maintained

From our recent visit to the Singapore telcos, we gather that StarHub is currently in talks with FA Premier League (FAPL) but we believe that the rights to the Barclays Premier League (BPL) matches are less attractive given the limited time before the season starts. We also note that competition in fibre broadband has intensified. We maintain Underweight on the sector as de-rating catalysts are expected from SingTel given regulatory and competitive risks. Our top pick is StarHub.

Plantations

CPO survives the price band test

NEUTRAL - Maintained

We are encouraged by the evidence presented by Dr Fry at yesterday's PAC seminar that the emergence of biodiesel demand has created a floor price for CPO. There is potential upside of about US$250 per tonne (up 30%) for the CPO price, should it revert to its historical average premium over crude oil. This assumes the crude oil price stays at the current level and palm oil stocks normalise. However, these positive factors are negated by concerns over rising palm oil supplies from Indonesia and potential decline in crude oil price due to the emergence of shale gas. We maintain Neutral on the sector and keep Wilmar and BW Plantations as our top picks. 


From OCBC:
Triyards Holdings: Results in line; bright prospects
Summary: Triyards Holdings (Triyards) reported a 23% YoY rise in revenue to US$79.4m and a 157% increase in net profit to US$7.1m in 2QFY13, such that results were in line with our expectations. Revenue increased due to two self-elevating units (SEUs) which started construction, as well as completion of variation order on an offshore support vessel. Gross profit margin in 1HFY13 was stable compared to 1HFY12. Management is receiving healthy enquiries for the construction of SEUs as well as customized supply vessels. The group has also completed the design of the third generation SEU. Unlike the first and second generation SEU, this latest one has drilling capabilities, and management is optimistic about its prospects. Maintain BUY with S$1.07 fair value estimate, based on 8x FY13/14F earnings.

Mapletree Logistics Trust: Valuation looks fair now
Summary: We believe investors are finally acknowledging Mapletree Logistics Trust’s (MLT) attractiveness, as evidenced by its recent strong unit price performance. At a P/B ratio of 1.45x, however, we believe MLT is now fairly priced. While ~55% of its revenue is derived from overseas assets, we are mindful that a substantial 658k sqm of supply in warehouse space is expected to be delivered to the Singapore warehouse market in 2013. This is likely to exert pressure on warehouse occupancy rates as well as cap the rise in rentals and the rate of positive rental reversions achieved by MLT in the near term. In addition, the introduction of the cooling measures in the industrial market and upfront land premium by JTC has inevitably made investors more cautious as it may now be more onerous for industrial landlords to acquire properties. Given the market conditions, we believe that any upside in MLT’s units is limited at the current juncture. Downgrade MLT from Buy to HOLD on valuation grounds. Our fair value is now raised from S$1.25 to S$1.34 as we tweak our RNAV assumptions and roll over our valuation to FY14.

Ezra Holdings: Expect delays in award of projects
Summary: Ezra Holdings (Ezra) reported a 17% YoY increase in revenue to US$247.1m and a 34% rise in net profit to US$29.7m in 2QFY13, such that 1HFY13 revenue and net profit met 42% and 71% of our full year estimates, respectively. However, we note that net profit was bumped up by a US$30m disposal gain on fixed assets; excluding that, core net profit was minimal. Uncertainty in the Eurozone has weighed on sentiments, and project execution and awards have been delayed relative to industry participants’ expectations in 2012. Pending an analyst briefing later, we put our HOLD rating and fair value estimate of S$1.30 under review.

Lian Beng: Uninspiring 9M13 performance
Lian Beng’s 9M13 PATMI decreased 25.7% YoY to S$30.1m despite revenue increasing 5.1% YoY to S$350.7m on higher revenue recognition from construction projects. The decline in profit was attributable to lower gross margin, higher operating expenses and a one-off gain of S$7.9m on the sale of an investment property in 9M12. Lian Beng’s construction order book, including recent contract wins of Bartley Ridge, and projects at Sunview and Tampines Crescent, totals S$986m. Our fair value estimate and ratings are UNDER REVIEW pending a change in analyst.

TEE International: Weak 3Q13 results
Summary: TEE International’s 3Q13 net profit fell 22% YoY to S$1.4m, taking its 9M13 net profit to S$6.7m (down 13% YoY, forming just 41% of our full-year earnings forecast for FY13). Its revenue rose 109% YoY to S$53.0m in 3Q13, but gross profit fell 14% to S$5.7m as cost of sales soared 152% to S$47.3m. The latest results are disappointing and we expect TEE’s share price to weaken in the short term. We put our fair value estimate of S$0.30 and Hold rating for TEE UNDER REVIEW pending a change in analyst.

UOL Group: Top bid for Sengkang West Way
Summary. Yesterday evening, UOL put in the top bid of S$262.1m for the GLS site at Sengkang West Way. The tender attracted eight bids and UOL’s was 3.4% above the second higher bidder’s. The 99-year site has a land area of 178.7k sq ft and is located near the future Seletar Mall and Sengkang Riverside Park. The maximum GFA allowed is 536.2k sq ft, which can yield around 550 homes. UOL’s bid translates to a psf price of S$489 psf, which we believe is reasonable. We expect breakeven and selling ASPs at S$900 psf and S$1,000 psf, respectively, which translates to an estimated RNAV accretion of 5.5 S-cents per share. Pending the award of the site and more details regarding the site plans, we maintain our HOLD rating with an unchanged fair value of S$6.01 (20% discount to RNAV).

Singapore Economy: Contraction in 1Q13
Summary: According to advance estimates from the MTI, the Singapore economy contracted by 0.6% YoY in 1Q13, lower than the street’s expectations of zero growth and also worse than the 1.5% growth seen in 4Q12. On a seasonally adjusted, annualised basis, the economy contracted by 1.4% QoQ, compared to the 3.3% growth in 4Q12. Manufacturing contracted by 11.3% QoQ, vs a 3.1% growth in 4Q12, largely due to lower output in the biomedical manufacturing cluster. Construction grew by 15.1%, compared to 4Q12’s 3.9% negative growth. Services continued to expand by 1.8% after 4Q12’s 2.5% rise. Meanwhile, MAS has announced no change to the slope and width of the S$NEER policy band, as well as the level at which it is centred. This is assessed to be appropriate for containing inflationary pressures.

From UOB KH:
Triyards Holdings- 2QFY13: Pleasantly surprised; further
uplift from new third-generation liftboats. (ETL
SP/BUY/S$0.785/Target: S$1.11)
Maintain BUY and target price of S$1.11, pegged at 7.9x FY14F
PE, a 10% discount to peers’ average of 8.8x FY14F PE, due to
Triyards’ shorter operating track record and lumpy profit
recognition from Ezra’s Constellation, which comprises 17% of
FY14F net profit.

Oversea-Chinese Banking Corp- 1Q13 results preview:
Healthy loan growth, slowdown for insurance. (OCBC
SP/BUY/S$10.75/Target: S$12.68)
Maintain BUY. Our target price is S$12.68, based on 1.77x P/B,
derived from Gordon Growth Model (ROE: 11.5%, required
return: 7.8% and growth: 3.0%). 

Tianjin ZhongXin Pharmaceutical Group (TIAN SP, T14)
Technical BUY with +15.8% potential return
Last price: S$1.01
Resistance: S$1.17
Support: S$0.96
BUY with a target price of S$1.01 with stops placed below
S$0.96. The stock appears to find support near its potential
resistance-turned-support level near S$0.96 and has
rebounded near its 50-day moving average. Stochastics
indicator has formed a bullish crossover. Watch to see if the
stock could retest its recent high.

Silverlake Axis (SILV SP, 5CP) -
Technical BUY with +19.4% potential return
Last price: S$0.695
Resistance: S$0.83
Support: S$0.62
BUY with a target price of S$0.83 with stops placed below
S$0.62. The stock has rebounded near its resistance-turnedsupport
level at S$0.62 and has been trending up, supported
by its mid Bollinger band and its 50-day moving average. Its
MACD indicator appears to negate its bearish crossover
earlier and Stochastics indicator has formed a bullish
crossover. Watch to see the price action at around S$0.75.
Our retail research has a fundamental BUY with a target price
of S$0.91.

SPDR Gold Shares (GLD SP, O87) –
Technical SELL with +7.2% potential return
Last price: US$150.9
Resistance: US$155
Support: US$140
SELL with a target price of US$140 with stops placed above
US$155. The stock has failed to close the gap down on 3 Apr
13 and could be subjected to more selling pressure as prices
have been resisted by its mid Bollinger band and its declining
50-day moving average. Its MACD indicator has hooked down
and Stochastics indicator has formed a bearish crossover.
Watch for a break below US$149. 

From Maybank KE:
CWT Int: Keeping The Momentum Going; BUY, TP $2.05
CWT SP | Mkt Cap USD767.1m | ADTV USD1.1m
We  hosted a luncheon for CWT’s CEO, Mr Loi Pok Yen yesterday, which
was  very well-received by institutional investors. We expect the stock
 to  continue  re-rating  as  its  appeal  to institutions increase from
 higher profit base and stock liquidity.
 Management  remains  confident  of  organic  volume  growth  in  its
 commodity  trading business, with volumes targeted to double this year.
 Margins should improve on operating leverage.
 Management concurred that there is significant value in its warehouse
 portfolio, which we estimate at SGD1.25/ share. Reiterate BUY with a TP
 of SGD2.05. 

Lian Beng Group: No Bling For Now; HOLD, TP $0.49
LBG SP | Mkt Cap USD209.8m | ADTV USD1.0m
3QFYMar13  results  came  in  in-line  with  expectations. 9MFYMay13
revenue  and net profit are up 5.1% and down 24.2% YoY to SGD350.7m and
SGD30.7m  respectively, due to a lack of property earnings.  As we roll
over  our  earnings  forecast to FYMay14, we have changed our valuation
matrix from P/E to SOTP valuation to value its diversified businesses.
Four construction contracts have been secured year-to-date, bringing
its  orderbook  to SGD986m. We view this to be positive as it surpasses
our construction orderbook estimates of SGD300m verses SGD538m contract
win.
With the recent run-up in share price, we believe Lian Beng has fully
 valued  the  incoming property earnings from M-Space @ Mandai and other
 partial property stakes. Maintain HOLD. 

Local Brokerages Stock Call 11 April 2013

From CIMB: Ezra Holdings

2Q13 preview: muted subsea

UNDERPERFORM - Downgrade | S$1.10 - Tgt. S$0.90 We expect Ezra’s 2Q13 results to remain weak as subsea activities in the North Sea could be affected by poor weather conditions from Dec-Feb. We have slashed our EPS by 24-38% for FY13-15 on lower subsea margin as it could take longer to beef up this new segment. Downgrade to Underperform from Outperform with a lower target price of S$0.90, based on 10x CY14 P/E, -1 s.d. below its 5-year mean (previously 12x on small/mid-cap industrials' 5-year mean). Its share price could be weighed down by a weak 2Q13. Plantations A more difficult upward march NEUTRAL - Maintained We have cut our average CPO price by 2-5% for 2013-2015 to account for lower biodiesel demand from Europe and higher palm oil and soybean supplies. 1Q13 CPO prices were below our expectations as high palm oil stocks continue to put a lid on price rallies. We cut our EPS forecasts for planters by 1-30% to reflect our crude palm oil (CPO) price downgrade. This reduces our target prices by up to 2-24% across the board. We have downgraded ratings for AALI, SGRO, SIMP and IFAR due to weaker earnings prospects, and upgraded IOI Corp to Neutral. Our sector rating remains Neutral as we believe its underperformance has priced in weaker earnings prospects. Our key top picks are Wilmar and BW Plants.  Courts Asia Cavalier no more OUTPERFORM - N/A | S$0.98 - Tgt. S$1.32 Courts’ bad debt problems are a thing of the past. It still makes money from consumer financing, but it is more aware of the risks and has taken steps to control it. Today, it is proxy to a spurt of completed housing units in Singapore and store expansion across the region. We think it is a reasonable consumer play. We initiate coverage with an Outperform. We value Courts using a residual income model with 8% cost of equity and 1% terminal growth. Our target price implies 15x CY14 P/E, which is a 25%-discount to regional peers. We see catalysts from Singapore same-store-sales growth (SSSG) and regional store expansion.  From UOB KH: Overseas Education  We initiate coverage on Overseas Education (OEL) with a BUY recommendation and a DCF-based target price of S$0.88, implying a 21.4% upside from the current price. OEL is one of four Singapore-listed education service providers and is the investment holding company of Overseas Family School (OFS), the third-largest foreign system school (FSS) in the country. Backed by a 20-year history, OFS continues to benefit from resilient demand for quality education as Singapore’s foreign talent population grows. It is set to increase its capacity by 22% with the potential opening of a new campus in 2015. With strong cash flow and balance sheet, we expect OEL to be able to retain its net cash position throughout the construction of its new campus.   DBS Group Holdings- 1Q13 results preview: Operationally a strong quarter. (DBS SP/BUY/S$15.60/Target: S$19.90) Our target price is S$19.90, based on 1.55x P/B, derived from the Gordon Growth Model (ROE: 11.4%, required return: 8.0% and constant growth: 1.8%). SIA Engineering- Attractive 4.5% yield, but likelihood of special dividend cannot be ruled out. (SIE SP/BUY/S$4.87/Target: S$5.20) Maintain BUY. We continue to value SIAEC on a DDM basis. We also believe that the stock has little downside risk and should be viewed as an alternative to traditional yield instruments such as REITs. Ying Li International Real Estate (YINGLI SP, 5DM) – Technical BUY with +26.3% potential return The stock appears to be supported above its mid Bollinger band and its 50-day moving average… Chip Eng Seng Corp (Chip SP, C29) - Technical BUY with +9.6% potential return The stock appears to be supported above its mid Bollinger band and has been trending above its 50-day moving average… Wilmar International (WIL SP, F34) – Technical BUY with +6.8% potential return The stock appears to be supported by its rising trendline and its lower Bollinger band. The potential rebound from here From OCBC: KSH Holdings: More earnings growth momentum likely We recently met with KSH management and keep intact our FY13E and FY14E forecasts at S$30.7m (up 68% YoY) and S$53.0m (up 72% YoY), respectively, which are underpinned by progress billings for already-sold projects in Singapore. Beyond FY14, we see earnings growth momentum likely continuing due to the upcoming launch of its Beijing condo project this year (Liang Jing Ming Ju Phase 4) which would contribute an estimated S$23m net earnings upon TOP. We also understand management is also focused on launching Phase 1 of its 533-hectare Gaobeidian township project (GBD), located 30 mins away from Beijing city via high-speed rail. For upcoming FY13E results, we expect final dividends in the range of 0.5 – 1.5 S-cents and possibly a bonus share issue as well. Maintain BUYwith an increased fair value estimate of S$0.73, versus S$0.62 previously, as we now incorporate accretion from Liang Jing Ming Ju into our SOTP valuation model and raise our PE multiple for the construction segment from 4x to 5x, in line with peers trading at 5-7 times. Rotary Engineering Ltd: Ceasing coverage Rotary Engineering Ltd (Rotary) had a difficult year in 2012, as it battled escalating cost over-runs on its US$745m SATORP mega-project and repeated delays on its S$260m Fujairah Oil Terminal project. In 4Q12, the group appeared to be making progress on its SATORP project, although the non-controlling deficit is still a thorny issue. The group recently secured S$42m of project work in Singapore’s Jurong Island, and S$300m of EPC work in Pulau Busing. However, the tighter foreign labour market in Singapore could mean lower project margins over the medium term horizon. Coupled with the uncertainty at its SATORP JV, it may still be too early for investors to buy its shares, which are currently trading at 1.4x PBR. Meanwhile due to a reallocation of resources, we have decided to CEASE COVERAGE. ST Engineering: ST Aerospace won S$480m of contracts in 1Q13 ST Engineering (STE) announced that its aerospace arm, Singapore Technologies Aerospace Ltd (ST Aerospace) has secured new contracts worth about $480m in 1Q13. The contracts are for airframe, component and engine maintenance, as well as engineering and development, which will be carried out through its global maintenance, repair and overhaul (MRO) network. As this is in line with our expectations, we maintain our fair value estimate of S$4.12 and HOLD rating on STE.  From Maybank KE: Privatisation Plays - From Hot Buns to Beams of Steel The  appearance  of  Thai  F&B  player  Minor International as a 10%  shareholder  in  Breadtalk  is  currently tantalizing the taste buds of local investors. We think the flour will not stop rising yet.   Our  analysis  of  54  such  M&A  transactions  since 2011 show that   consumer  stocks  are  popular  and takeover premiums were mostly above   20%.    We  put  on  our  tall  thinking  hats and came up with nine quality    small-mid  caps  with favorable chances for positive corporate actions.   These  are  China Minzhong, Dukang Distillers, Hotel Properties, Midas,   Sarin, Sing Holdings, Super Group, Viz Branz and Yongnam. From OSK DMG: Scoop of the Day: China Animal Healthcare (CAL SP, US$340m market cap) announced that it has entered into conditional subscription for shares and warrants in the company by Lilly Nederland Holding B.V. to form part of the funding of its possible delisting offer. CAL had announced in May 2012 its intention to de-list from SGX (but keep its HK listing status) at a possible offer price of S$0.30. The new investment will be carried out in two tranches - 1) 53m shares at issue price of S$0.30 and 106m warrants at nil consideration with exercise price of S$0.30 (equates to 8.33% of issued capital on a fully- diluted basis), and 2) 240m shares at issue price of S$0.30 (equates to 11.20% of issued capital on a fully-diluted basis). Lilly is one of the largest pharmaceutical company in the world and its investment in CAL is likely to add positive synergies to the group. In a recent media report, we note that Lilly is committed to providing innovative solutions to enhance food production and companion animal care. This, in turn, helps to ensure a growing supply of safe, affordable and abundant food in China. The latest announcement is likely to add clarity to the de-listing process and we believe there will be more positive developments following an outcome. As noted in the media report, both parties have agreed to work on opportunities for future commercial collaboration activities. Hence, investors might want to opt to migrate their shares to HKSE. In the meantime, share price could see positive impact from the latest announcement. (Singapore Research) ComfortDelGro: Positive On London Bus Acquisition (BUY, S$1.90, S$2.20) ComfortDelGro (CD) announced that it is acquiring part of FirstGroup’s London bus business for GBP57.5m (SGD109m). The purchase price implies an EV/EBITDA of 5.2x while CD currently trades at 6.1x FY13 EV/EBITDA. We are positive on the acquisition, and raise FY13/14 earnings by 2.9%/5.5%. Maintain BUY with higher TP of SGD2.20 (from SGD2.10 previously) based on DCF (WACC:9.0%; TGR: 2.5%).

Local Brokerages Stock Call 10 April 2013

From OCBC:
Hyflux: China back on radar screen  
Summary: Hyflux recently announced that its subsidiary – Hyflux Investment Consultancy and Management Service (Tianjin) Co – has signed two memoranda of understanding (MOUs) with the prefectural governments of Chuxiong and Qujing in Yunnan province to develop water and environmental projects in these two cities. Management estimates the project in Chuxiong to be less than RMB2b and Qujing to be ~RMB1.2b. While it is still early days yet, we view the MOUs as a positive development as it suggests that China is back on the radar screen. For now, we will maintain our HOLD rating and S$1.44 fair value on the stock; but we do see room for re-rating should these MOUs translate into actual contracts. 

ComfortDelGro: Now joint-second in London
ComfortDelGro’s acquisition of a portion of FirstGroup plc’s London bus business for approximately S$109m will increase its London bus fleet significantly by 494 to 1,700, and bring its market position to joint-second alongside Arriva London with a market share of around 19% (previously 12%). In addition, its UK bus revenue and operating profit should increase by ~37% as a result (assuming FY12 figures). With the outlook for ComfortDelgro’s overseas ventures in FY13 remaining positive, our focus shifts domestically where we expect a fare increase to materialise by mid-2Q13, which we feel much of the street has already priced in. Pending its upcoming 1Q13 results, we maintain our HOLDrating on ComfortDelgro with an unchanged fair value estimate of S$1.95.  

Midas Holdings: Secures S$17.3m in orders for Singapore MRT train parts
Midas Holdings announced last evening that it has secured S$17.3m (~CNY86.5m) worth of orders from longstanding customer Alstom Transport S.A. This entails the supply of train car body parts for 18 train sets (or 108 train cars) for Singapore’s North East Line and 24 train sets (or 72 train cars) for the Circle Line. Delivery is scheduled to take place from 2013 to 2015.This is Midas’ second international contract win of the year and helps to boost its total orders won YTD to ~CNY379m, already higher than the CNY325m in orders won for the whole of 2012. Given that the Singapore government has committed to spending ~S$1.75b from 2013 to 2019 to upgrade and purchase assets for its rail system, we believe that future contract wins for similar projects are possible for Midas. We retain our forecasts as we have already assumed such contract wins in our assumptions. Maintain BUY and S$0.595 fair value estimate on Midas, based on 1.2x FY13F P/B. 

From CIMB:

STX OSV

Looming Brazilian harvest

TRADING BUY - Trading Call | S$1.22 - Tgt. S$1.38

We believe that the lacklustre share price of STX OSV, which has adopted a new brand name, VARD, could be catalysed by sizeable Brazilian orders worth up to US$530m or NOK3bn (translating to 27% of our FY13 order target) in the next couple of weeks. Given its recent underperformance and sentiment uplift from this headline-win, we upgrade VARD to Trading Buy from Neutral. The stock is not an Outperform as there could be downside risks to the company’s longer-term margins profile. Further, the absence of communications from the new majority owner, Fincantieri, could put off longer-term investors. No change to our EPS or target price, still at 8x CY14 P/E, one s.d. above its trading mean. 

From Maybank KE:
Keppel Land: Soft Start To Be Expected; Maintain Buy, TP $4.78
KPLD SP | Mkt Cap USD4.9b | ADTV USD10.0m
We expect KepLand to report a 72% decline in 1Q earnings on 17 April, but we reiterate that the volatility in quarterly earnings is to be expected. We maintain our BUY recommendation and target price of SGD4.78.
Rather than focusing on the headline numbers, we would instead focus on KepLand’s execution. In particular, its home sales in China have already improved by >80% YoY for the period of 2M13 and we expect demand from first-timers and upgraders to persist.
The stock still trades cum-dividend until 23 April. A higher dividend for FY13 is still possible should MBFC Tower 3’s commitment level exceed 90% this year and subsequently divested.

From UOB KH:
Hutchison Port Holdings Trust (HPHT SP)
There has been a strike at HPHT’s HIT since 28 March. Operations at HIT
were smashed in the first few days but have resumed to 80% of the normal
level after some workers went back to work. The direct financial impact is
insignificant (less than 2% of 2013F net income) but is still too early to
evaluate the long-term impact. Maintain BUY. Target price: US$0.96.

Wilmar International (WIL SP)
Africa Is The New Expansion Focus
In its 2012 annual report, Wilmar highlighted its long-term strategy to focus
on greenfield projects with high potential despite the longer gestation. Key
expansion will be in the fast-emerging markets in Africa - Ghana and Nigeria.
Consumer packs continue to be a strong market leader. The impact of the
country diversification strategy is starting to show in the higher contribution
from non-China markets. Maintain BUY. Target price: S$3.80. 
  
From DBS:
Midas has won a S$17.3m supply contract for train car body
module components for new trains on Singapore's North East
Line (NEL) and Circle Line (CCL). This will grow their order
book to c. RMB800m. The supply contract is for 2013 to
2015, for 18 train sets or 108 train cars for NEL and 24 train
sets, or 72 trains for the CCL. This is positive for Midas as
they have been winning export orders and metro contracts in
China of late, especially as we wait for high speed train
orders to come through. Maintain BUY, TP S$0.60.

Local Brokerages Stock Call 9 April 2013

By CIMB:

Keppel Corporation

Top drillers prefer Singapore yards

OUTPERFORM - Maintained | S$11.16 - Tgt. S$13.30 We are convinced that tier-1 drillers still prefer to order their jack-up rigs from the Singapore yards, as testified by Ensco’s latest order of a Keppel FELS B Class Bigfoot for 2015 delivery. We maintain our Outperform rating on Keppel Corp, our top big-cap sector pick. According to Ensco, continued strong demand from customers has spurred the order of rig from Keppel. The construction cost is expected to be approximately US$225m. This brings Keppel’s YTD orders to S$1.87bn or 34% of our S$5.5bn target. No change to EPS and target price, still based on RNAV. Stronger orders and margins are the key catalysts. Shipping Monitor   Asia-Europe remains troubled NEUTRAL - Maintained Current Asia-North Europe rates, despite carriers’ best efforts at four general rate increases (GRI) since November, are now US$700/teu below their equivalent 2012 levels and US$200/teu lower YTD. The transpacific spot rates are, however, doing better than last year. We remain Neutral on shipping overall, with Pacific Basin staying as our top pick for its compelling valuations and good earnings report card amid weak bulk shipping markets. STX Pan Ocean remains our top Underperform. We also like strong companies with relatively resilient earnings and peer-beating performance like OOIL and SITC, especially after the recent sell-off in the stock markets. From OCBC: Biosensors International Group: Challenges apparent, but seeking market share gains Biosensors International Group’s (BIG) regional peers have faced headwinds in the Chinese drug-eluting stent market, as highlighted in their recent results announcement. We believe that these factors, such as a slowdown in growth of PCI surgeries, would also have an adverse impact on BIG. However, we expect BIG to continue its market share gains in other key markets such as the EMEA region. BIG is also stepping up its collaboration with its licensee Terumo Corp to address the recent decline in licensing revenue from Japan. Nevertheless, we believe that a further depreciation of the Japanese Yen due to stimulus measures by the Bank of Japan could exacerbate this problem. We thus trim our FY14F revenue and core PATMI forecasts by 0.6% and 1.6%, respectively. However, we maintain our BUY rating although our FCFE-derived fair value estimate declines marginally from S$1.63 to S$1.60.  Fortune REIT: Strong fundamentals The growth in HK’s retail sales has picked up significantly since 4Q12. Combining the first two months of 2013 to eliminate distortions from the timing of Chinese New Year, retail sales climbed up 15.8% in value. Robust retail sales will continue to underpin the growth in retail rents throughout HK. The media has reported that a group has called for the boycott of Park’N Shop supermarket chain, which is part of Li Ka-shing’s Hutchison Whampoa Ltd, in support of dock workers who are striking for better work conditions. Park’N Shop is FRT’s top tenant, accounting for 8.0% of the REIT’s total gross rental income in Dec 2012. According to FRT management, businesses are running as usual and impact to the Park’n Shop outlets in FRT’s malls has not been seen. Management has indicated that 2013's rental reversions are likely to be in the mid-teen percentages. FRT has a low gearing of 23.4% and no refinancing needs till 2015. We are maintaining our fair value of HK$7.28 and BUYrating on FRT.  Keppel Corporation: Market for premium jackups is strong Keppel Corporation (KEP) announced that its O&M arm has secured a contract to construct a KFELS B Class jackup rig from Ensco.  The construction cost, together with the commissioning, systems integration testing and project management is expected to be US$225m. When completed in 1Q15, this will be the fourth KFELS B Class Bigfoot unit in Ensco’s fleet. With this latest order, KEP has won about S$1.85b of new orders YTD, accounting for 37% of our full year estimate. Looking ahead, we expect order flows for such premium jackups to continue. Indeed, Ensco’s Chairman, President and CEO also commented that the market for premium jackups is “very strong”, and “customer demand is broad-based for high-specification jackup rigs”. Maintain BUY with S$12.68 fair value estimate on KEP.    From UOB KH: Singapore Property- Industrial: Relaxation of JTC sub-let rule to benefit industrial REITs. CACHE SP/ BUY/ S$1.31/ Target: S$1.45) MINT SP/ BUY/ S$ 1.465/ Target: S$1.66) MLT SP/ BUY/ S$1.24/Target: S$1.38) JTC has relaxed its third-party subletting rule to allow for smaller anchor tenants in industrial space owned by third-party facility providers such as REITs Yongnam Holdings- Exciting ventures into Myanmar (YNH SP/ BUY/ S$0.275/ Target: S$0.40) Upgrade to BUY with a higher target price of S$0.40, based on 9x 2013F PE, pegged to Singapore-listed peers’ average. Sino Grandness Food Industry Group (SFGI SP, JS5) – Technical BUY with +23% potential return Prices appear to be trending above its 20-day and 40-day moving averages which could be acting as supports GuocoLeisure (GLL SP, B16) – Technical BUY with +22.8% potential return Prices appear to be trending above its 15-day and 40-day moving averages which could be acting as supports JES International Holdings (JES SP, EG0) – Prices appear to rebound above its potential resistance-turnedsupport level near S$0.16…  From DBS: Keppel Corp announced this morning that it has secured a repeat jackup order from Ensco worth about US$225m. The new contract brings Keppel's YTD win to S$1.87bil, forming 31% of our full year assumption of S$6bn. No change to our earnings forecast, Buy recommendation and $13 TP.

Local Brokerages Stock Call 8 April 2013

From OCBC:
BreadTalk Group: Not fully baked yet

Summary: The 12% correction in BreadTalk’s share price over the past two days has helped to temper the sudden spike from late-Mar, and we take this opportunity to caution investors against getting too carried away. In our view, a takeover by Minor International is remote at this juncture. Despite impressive yearly double-digit revenue growth, BreadTalk has yet to translate the success to its operating margins. Although its ongoing expansion plans are partly to blame, the pace of the margin declines does create some concerns over its operational efficiencies in the long-run. In addition, with FY13 PATMI and dividend growth unlikely to differ much from recent performances, we deem BreadTalk expensive at current price levels. Keeping our fair value estimate of S$0.77, we downgrade BreadTalk to SELL and urge investors to take profit.

Chinese shipyards: Industry profitability remains under pressure

Summary: The share price performances of COSCO Corp (Singapore) and Yangzijiang Shipbuilding (YZJ) have been uninspiring in recent history. COSCO’s share price has fallen by about 21% in the past one year, while YZJ’s has decreased by about 25%. We believe this is mainly due to a lack of positive catalysts amidst the difficult operating environment in China. In terms of offshore projects, Chinese yards still lack the established track records of their Asian competitors, but their organization, efficiency and sophistication are on the rise. To compete, the Chinese yards are going after orders at lower margins and back-end loaded payment terms. This inevitably leads to lower profitability and higher working capital requirements. Over the near- to medium- term horizon, we believe that the industry dynamics is unlikely to change significantly. Maintain HOLD ratings for both COSCO (FV: S$0.90) and YZJ (FV: S$0.95). 

From Maybank KE:
Singapore Exchange: Bright Start To 2013; Maintain Buy TP SGD9.00
SGX SP | Mkt Cap USD6.5b | ADTV USD12.7m
We are highlighting that the upcoming set of 3QFY13 results will be of major significance. Our street-high net profit forecast of SGD94.5m for the quarter will represent SGX’s most profitable since the Great Financial Crisis.
The expected 22% yoy growth will be driven by an uptick in trading volume since the start of 2013 a surprising growth momentum in derivatives trading.
We reiterate BUY with a TP of SGD9.00, pegged to 29x FY13F, 1-standard deviation above historical mean.

Genting Singapore: Pick A Card, Any Card; Maintain Buy TP SGD1.67
GENS SP | Mkt Cap USD14.3b | ADTV USD37.0mGENS remains optimistic on its prospects going forward, especially in the VIP segment, while we are sanguine on potential margin compression from the newly-opened Marine Life Park (MLP). There are significant economies-of-scale in the operation of aquariums that will ensure a quick turnaround. Our 2013 earnings estimates are trimmed by 6% but 2014-15 forecasts are unchanged as we expect the MLP margin compression to be temporary. As our longer term earnings are relatively unchanged, we maintain our BUY call and SGD1.67 TP on 13.5x 1-year forward EV/EBITDA.

From DBS:
Wilmar - Near term downside risks; target price reduced to S$ 3.72 
Our analyst sees near term downside risks for Wilmar. Though
he continues to monitor the mass culling of poultry flocks in
China and thus far, there is no significant impact on soybean
crush margins, however, he expects 1Q13 Palm & Lauric pretax
to drop q-o-q on weaker Indonesian refining margins.
FY13F/14F/15F earnings were cut by 8%/8%/4% after
imputing lower palm oil refining margins. Maintain HOLD call,
target price reduced to S$ 3.72 (Prev S$ 3.88) as there is no
major near term re-rating catalyst. Despite near-term
challenges, Wilmar’ long term growth outlook is intact led
by recovering CPO prices, expansion in branded consumer,
sugar origination and investments in Africa.