Local Brokerages Stock Call 10 May 2013

From OCBC:
StarHub Ltd: Downgrade to SELL – pricey now
StarHub Ltd posted 1Q13 revenue of S$580.1m, down 2% YoY and 11% QoQ, but still met 23% of our full-year forecast. Net profit grew 3% YoY and 4% QoQ to S$91.2m, meeting 25% of our FY13 forecast. And as guided, StarHub declared a quarterly dividend of S$0.05/share, payable on 30 May 2013. For 2013, StarHub now expects to see low single-digit revenue growth, versus single-digit growth guidance previously. Management says it is being more cautious in view of the 2% drop in revenue in 1Q13. Otherwise, it has kept everything else unchanged. Stock price has outperformed not only its peers but also the STI. While part of the run-up could be driven by investors searching for yield, current valuation looks pricey; yield has also fallen to 4.2%. A more “risk on” approach could also see investors switching out of defensive stocks. As such, we downgrade our call from Hold to SELL, with an unchanged DCF-based fair value of S$4.00.

Fortune REIT: 1Q13 exceeds expectations

Fortune REIT reported excellent results for 1Q13. Revenue and net property income climbed 16.3% YoY and 17.6% YoY to HK$301.4m and HK$217.9M respectively. Occupancy rose to 98.6%, the highest level in over two years, with good portfolio-wide operational statistics and a fast recovery after AEI. Average passing rents grew by 10.0% YoY to a new high of HK$32.9 sq ft. Due to a strong leasing market, rental reversions were at 19.5%, higher than the mid-teen percentages that management had guided. While 2Q/3Q may see anchor tenants renewing leases with lower percentages, we think that revenue and net property income are likely to grow on a QoQ basis. DPU of 9.0 HK cents formed 27% of our initial FY13 estimate and 26% of the street’s FY13 consensus estimate. Raising revenue assumptions and lowering interest cost assumptions, we lift our fair value to HK$8.64 from HK$7.28 and we maintain a BUY rating on FRT. It is trading at a still-attractive P/B of 0.9x.

Hyflux: Slow start to 2013 as expected
Hyflux Ltd reported its 1Q13 results last night, with revenue slipping 8% YoY and 38% QoQ to S$124.5m, or around 17% of our full-year forecast; net profit rose 5% YoY (though down 62% QoQ) to S$8.0m, or 10.2% of our FY13 estimate. However, we are not perturbed by the seemingly slow start as 1Q is traditionally their weakest quarter. Going forward, Hyflux remains fairly optimistic about its prospects; and will actively pursue opportunities in Asia and MENA. As results are in line, we opt to keep our estimates unchanged. Maintain HOLD with an unchanged S$1.44 fair value. 

Marco Polo Marine: Drop in shipbuilding activity
Marco Polo Marine (MPM) reported a 31% YoY fall in revenue to S$21.3m but a 121% rise in net profit to S$9.3m in 2QFY13, such that 1HFY13 net profit accounted for 58% of our full year estimate. Excluding an exceptional gain of S$5.7m, core net profit was about S$3.7m, slightly below our expectations. The lower revenue was mainly due to lower contributions from the shipbuilding and repair segment with fewer third-part new-built contracts. Gross margin was 42% in 2QFY13, compared to 27% in 2QFY12 and 39% in 1QFY13. Pending an analysts’ briefing later, we put our Buy rating and fair value estimate of S$0.56 under review. 

From UOB KH: 
Overseas Education- 1Q13 Results: Within Expectations
(OEL SP/BUY/S$0.70/Target: S$0.88)
Maintain BUY and target price of S$0.88 based on a 3-
stage DCF model. The implied 2013F PE is 17.4x, which is
in line with peers’ average. We forecast dividend yields of
3.6-4.3% for 2013-15 based on a 50% payout ratio.

Mapletree Commercial Trust (MCT SP, N2IU) -
Technical BUY with +8.1% potential return
Last price: S$1.48
Resistance: S$1.60
Support: S$1.42
BUY with a target price of S$1.60 with stops placed below
S$1.435. The stock appears to be trending up and above its
rising mid Bollinger band which could be acting as a support.
Prices have also have been trading above the gap near
S$0.425 which was created on 23 Apr 13. Its MACD indicator
appears to hook up instead of forming a bearish crossover
and its RSI has rebounded above a reading of 60. Watch to
see if the Stochastics indicator could form a bullish crossover.

KSH Holdings Ltd (KSHH SP, ER0) -
Technical BUY with +17.9% potential return
Last price: S$0.475
Resistance: S$0.56
Support: S$0.46
BUY with a target price of S$0.56 with tight stops placed
below S$0.46. The stock is likely to trend higher as it appears
to be supported by its rising 35-day moving average and has
closed above its mid Bollinger band while forming a higher
low. Its Stochastics indicator has formed a bullish crossover
and was accompanied with a RSI rebound above a reading of
40. Watch to see if the MACD indicator could form a bullish
crossover.

Del Monte Pacific Ltd (DELM SP, D03) -
Take profit from previous technical BUY
Last price: S$0.935
Resistance: S$0.96
Support: S$0.71
The stock was featured as a technical BUY when it opened at
S$0.78 on 25 Apr 13. It has since returned 19.8% on closing
prices, with an intraday high of S$0.94 in the last trading
session which is near the initial technical buy target of
S$0.96. Some profits could be taken off the table should the
stock fail to exceed S$0.96. Its 21-day Stochastics is trending
in the overbought region.

Ezion Holdings- 1Q13: Net profit more than doubles.
(EZI SP/BUY/S$2.21/Target: S$2.60)
FY13F PE(x): 11.6
FY14F PE(x): 9.0
Boosted by gain from asset sale. Ezion reported 1Q13 net profit of US$46.2m (+227% yoy). Other income of US$21.5m included a gain of US$17.8m from the disposal of Ezion's stake in OMSA (the JV unit that is handling offshore marine logistics for the
Gorgon project in Australia) with the balance US$3.7m predominantly due to operation management fees.
Maintain BUY. Our target price has been raised from S$2.40 to S$2.60, which is pegged at 11x 2014F fully-diluted EPS (adjusted for dividends on perpetual securities). This is 15% above the long-term 1-year forward PE mean of 9.6x for the offshore support
vessel-owner segment of the offshore & marine sector.

Kreuz Holdings- 1Q13: In line; new capacity to bridge 2014 growth gap.
(KRZ SP/BUY/S$0.60/Target: S$0.68)
FY13F PE(x): 5.9
FY14F PE(x): 5.8
Results in line. Kreuz Holdings (Kreuz) reported a net profit of US$10.8m (+91% qoq +5.4% yoy) for 1Q13, which is in line with our forecast of US$10.4m and accounts for 23% of our full-year estimate.
Strong earnings visibility. Kreuz’s end-1Q13 orderbook stood at US$200m, which will be recognised over 12-18 months. Based on the current orderbook and without any new contract wins, we estimate that the group will be able to achieve 70-75% of our 2013
full-year revenue forecast.
Maintain BUY with an unchanged target price of S$0.68, pegged to an undemanding 2014F PE of 6.5x, which is at a 32% discount to the offshore support vessel owner segment’s long-term PE mean of 9.6x.

StarHub- 1Q13: Rate of growth slows down; valuation stretched.
(STH SP/SELL/S$4.72/Target: S$3.82)
FY13F PE(x): 23.2
FY14F PE(x): 21.3
StarHub reported a net profit of S$91.2m for 1Q13 (+3.2% yoy), in line with our expectations. The results included an adoption grant of S$15m that Nucleus Connect received as Operating Company for NGNBN.
Lower revenue guidance. Management guided low single-digit growth (previous: single-digit growth) in service revenue for 2013.
EBITDA margin is expected to be about 31%. Capex is expected to be higher at about 13% of service revenue (2012: 11.3%).
Our target price for StarHub is S$3.82 based on DCF (required rate of return: 7.2%, terminal growth: 0%).

From Maybank KE:

StarHub: Stars Moving Out Of Alignment; Downgrade to Sell TP $4.20
STH SP | Mkt Cap USD6.6b | ADTV USD6.1m
Downgrade  to  SELL.  Admittedly,  this  is a risky call amidst the
current  liquidity and yield compression conditions, but we had held on
to  our  BUY call with the highest TP on the Street even when the stock
exceeded all expectations. Switch to M1.
Now  the  dividend  spread  is getting ever thinner, competition is
heating  up,  revenue guidance cut and demands on cash are growing more
onerous.  While  gearing  is  ultra-low,  the  nearest  window for more
dividends  has  now  been  pushed  back with a delay in the 4G spectrum
auction toward 2H12.
The  fixed  dividend and yield of 4% may still provide some comfort
and  prevent  an  immediate rush to the exit, but we would still advise
clients  to  sell  into  strength.  Our DCF-derived TP is SGD4.20 (prev SGD4.31).
  
Ezion Holdings: Entering the High Growth Years; Buy TP $2.56
EZI SP | Mkt Cap USD1.7b | ADTV USD12m
Maintain  BUY  on  Ezion  as we raise our valuation multiple to 15x
FY13F  PER (from 13x), TP SGD2.56. We believe that previous concerns on
high gearing have mostly dissipated as Ezion demonstrates astute use of
its capital.
1Q13 results were within expectations. Our forecast of 51% growth in
FY13F  EPS  and  a CAGR of 40% over FY13-15F remain well on track to be
met.  These  high  growth  expectations are primarily backed by secured
charter contracts limiting the risk of major misses.
We see sequential quarterly growth as more liftboat units are
deployed. Net gearing has risen to 0.83x in 1Q13 and is expected to
rise further in subsequent quarters.

From DBS:
1Q13 earnings for Kreuz Holdings in line; the group is on
track for another growth year. Prudent balance between
chasing growth and pace of adding assets should reap
benefits over the cycle. Kreuz is still cheap at just 6x FY13F PE
despite strong run. Maintain BUY with a higher TP of S$0.78
(Prev S$ 0.58).

Ezion’s 1Q13 results slightly ahead, recurring net profit
doubled y-o-y on 79% topline growth and firm margins.
Addition of 3 service rigs and maiden contribution from
GLNG will drive growth in 2Q. Our analyst expects further
fleet expansion, supported by sound financials and
strengthening cash flow. Maintain BUY; TP S$2.47.

Hyflux’s 1Q13 slightly under, formed 12% of FY13F. Revenue
fell short but margins held firm. Project execution is on track,
pipeline awaiting conclusion. Positive industry trend bodes
well for Hyflux but near term performance may be slow as
orderbook is depleting. Maintain forecast; HOLD and TP
unchanged at S$1.43.

StarHub’s 1Q13 earnings of S$91.2m (+3% y-o-y, +4% q-oq)
were in line; comprised 24% of our FY13F earnings.
Mobile revenue was weak but impact was offset by lower
handset subsidies and higher grants. Dividend yield of 4.2%
and mid-single digit growth prospects are priced in; maintain
HOLD and S$4.30 TP.

Sin Heng registered revenue of $40.3m (+51.2% y-o-y) for
3Q FY13 and $124.6m (+37.8% y-o-y) for 9M FY13. The
increase in total revenue was due to increase in both rental
and trading revenues. Gross profit of $7.2m for 3Q FY13 was
67.0% higher y-o-y while total gross profit of $21.6m for 9M
FY13 which was 61.7% higher than the prior 9M FY12. Gross
margin improved to 17.3% for 9M FY13 from 15.8% in
FY12. 3Q13 net profit doubled to S$3.1m while 9MFY13 was
up 67% to S$9.4m. Chartwise, it’s been based out at 0.245.
Looking ahead, the company is cautiously optimistic that the
key markets it operates remain encouraging. Technically, the
stock has been trading in a narrow band from 0.23-0.26
since early March. It looks to have based out at $0.24-0.245.
Scope for an initial move to $0.265, a rise above this is
needed to lift the stock to $0.285.

Local Brokerages Stock Call 9 May 2013

From OCBC:
Wilmar: Decent 1Q13 showing – maintain BUY
Summary: Wilmar International Limited (WIL) posted a pretty decent start to the year, with revenue of US$10.2b and core earnings of US$313.7m meeting 20.5% and 23.6% of our full-year forecast, respectively. Going forward, management remains confident that WIL will be able to overcome the difficult environment expected for the rest of 2013. While lower palm oil prices will continue to weigh on its Plantation business, cheaper feedstock would boost its downstream businesses, especially Consumer Products. WIL notes that the bird flu in China will affect meal consumption in the short term but it does not expect to have a long-term effect. As such, WIL remains optimistic about China’s long-term prospects. Maintain BUY with S$3.90 fair value (based on 15x FY13F EPS). Over the longer term, we are also cautiously positive on the company’s expansion in Africa and potentially Myanmar. 
 
ASL Marine: Still positive on its outlook
Summary: ASL Marine (ASL) reported a 26.6% YoY rise in revenue to S$144.0m and a 21.0% increase in net profit to S$9.6m in 3QFY13, such that 9MFY13 net profit accounted for about 71% of our full year estimates, within our expectations. Gross margin dropped from 14.0% in 3QFY12 to 13.0% in 3QFY13, and this was mainly due to lower shipbuilding margins and the inclusion of the Vosta LMG business. Looking ahead, the group expects the outlook of the offshore and marine industry for this year to be “good”, although competition seems to be increasing. We like ASL for its prudent management, healthy order books, diversified business model and growth potential from Vosta over the longer term. Maintain BUY with S$0.86 fair value estimate, based on 10x blended FY13/14F core earnings.

Far East Hospitality Trust: 1Q13 in line

Summary: Far East Hospitality Trust (FEHT) reported 1Q13 results that were in line with ours and the street’s expectations. Compared to forecast numbers in its prospectus, 1Q13 gross revenue at S$28.1m was 4.2% lower. DPU of 1.38 S cents is 3.0% higher than the 1.34 S cents forecasted, chiefly due to lower finance costs and other trust expenses. 1Q13 hotel RevPAR at S$161 was comparable to 1Q12 (S$162), and reasonably good given the soft 1Q13 for the industry, which saw RevPAR fall 3%.
Adjusting our FY13F revenue assumptions downwards slightly, our RNAV-based fair value falls from S$1.05 to S$1.01 and we maintain a HOLD rating on FEHT. We estimate a FY13 yield of 5.4%. 

BreadTalk Group: Still pricey for now
Summary: BreadTalk’s 1Q results came in within our expectations with revenue growing 13.4% YoY to S$120.3m on the back of broad segment increases while operating and PATMI increased by 45.6% and 46.0% to S$3.5m and S$2.1m respectively. Although BreadTalk’s move to its new headquarters next month will bring about improvements to its production efficiency and operating expenses, we do not expect cost savings to materialize in the immediate quarters due to the incurrence of transitional expenses. As such, we leave our FY13 projections unchanged. In terms of its share price, we remain cautious at this juncture as current valuations are still too expensive in our view. Coupled with an unattractive dividend yield of 1.0%, we maintain our SELL rating with an unchanged fair value of S$0.77. We will look to re-evaluate the counter once speculative interest arising from the MINT acquisition wanes. 

Ezion Holdings: 1Q13 results in line
Summary: Ezion Holdings (Ezion) reported a 79.3% YoY rise in revenue to US$54.8m and a 227.8% increase in net profit to US$46.2m in 1Q13. Excluding one-off items such as US$17.8m worth of disposal gains, recurring net profit is estimated to be about US$28.4m, accounting for 20% of our full year estimate. This is within our expectations as we are expecting stronger quarters ahead as more assets are deployed, and additional contributions from the APLNG and GLNG projects. Gross profit margin remained healthy at 44.9% vs 44.4% in 1Q12. Pending an analysts’ briefing later in the morning, we maintain our BUYrating but place our fair value estimate of S$2.35 under review. 

From UOB KH
Ying Li International Real Estate- New Management, New
Direction (YINGLI SP/BUY/ S$0.505/Target: S$0.65)
Maintain BUY with a target price of S$0.65, pegged at a
23.5% discount to our RNAV of S$0.85/share, in line with
the average discount for Chinese developers under our
coverage. Potential catalysts include the monetisation of its
retail assets as well as new growth initiatives of its new
CEO.

Neptune Orient Lines (NOL SP, N03) -
Technical BUY with +9.4% potential return
Last price: S$1.115
Resistance: S$1.22
Support: S$1.08
BUY with a target price of S$1.22 with stops placed below
S$1.08. The stock has rebounded from its lower Bollinger
band and broken above its declining 10-day moving average,
suggesting a potential downtrend reversal. Its Stochastics
indicator has formed a bullish crossover while its MACD
indicator looks poised to form a bullish crossover. Watch to
see if the stock could break above its 200-day moving
average.
Our institutional research has a fundamental BUY with a
target price of S$1.54.

Interra Resources Ltd (ITRR SP, 5GI) -
Technical BUY with +22.6% potential return
Last price: S$0.485
Resistance: S$0.595
Support: S$0.45
BUY with a target price of S$0.595 with stops placed below
S$0.45. The stock appears to be trending up and above its
100- and 150-day moving average and has rebounded from
its bullish harami pattern. Its Stochastics indicator has
formed a bullish crossover and its RSI indicator has turned up
above a reading of 40. Watch to see if the stock could break
above S$0.54.

Sarin Technologies (SARIN SP, U77) -
Take profit from previous technical BUY
Last price: S$1.495
Resistance: S$1.65
Support: S$1.35
The stock was featured as a technical BUY when it opened at
S$1.40 on 3 May 13. It has since returned 6.8% on closing
prices, with an intraday high of S$1.60 in the last trading
session which is near our initial target price of S$1.65. Some
profits could be taken off the table as its Stochastics indicator
has formed a bearish crossover and has turned down.

ARA Asset Management- 1Q13: A quiet quarter.
(ARA SP/HOLD/S$1.94/Target: S$1.91)
FY13F PE(x): 18.0
FY14F PE(x): 14.2
Revenues fell 6%yoy to S$32.2m due to the absence of one-off performance and acquisition fees (ARA had received fees related to Suntec REIT’s divestment of Chijmes and Fortune REIT’s acquisition of two properties in 1Q12). Adjusted recurrent net profit
excluding acquisition fees, performance fees and finance income rose 14% yoy to S$12.2m from S$10.7m due to growth in assets under management (AUM) and consequently REIT and portfolio management fees.
Maintain HOLD with a higher target price of S$1.91 (previous ex-rights S$1.70), after factoring in lower interest rates by reducing required rate of return assumption by 80bps. Our target price is based on a sum-of-the- parts (SOTP) methodology, which comprises: a) the DCF-derived enterprise value of ARA's stable fee-based earnings stream, assuming 2.0% terminal growth and 7.7% required rate of return, b) strategic stakes in REITs and APN Property Group, and c) net cash. Entry price is at S$1.66.

Sembcorp Industries- 1Q13: Long-term positive outlook on utilities remains intact. Target price lowered by 3% to S$5.90. Maintain BUY.
(SCI SP/BUY/S$4.98/Target: S$5.90)
FY13F PE(x): 11.3
FY14F PE(x): 9.9
Within expectations. Sembcorp Industries (SCI) reported a flat net profit of S$176.9m for 1Q13. Results were within our and consensus expectations. 1Q13 net profit was 23% of our 2013 net profit forecast of S$786.0m. Utilities’ net profit was S$89.4m for 1Q13, down 10% yoy due to: a) Singapore power plant shut down for maintenance (resulting in higher cost and lower volume sales), b) 1Q12 had a one-off exceptional gas sale, and 3) blended power spreads were lower by 8-10% yoy. However, the lower utilities earnings were offset by higher earnings from marine, urban development and other businesses.
Maintain BUY. Our earnings forecasts are unchanged. We reduce our target price marginally from S$6.10 to S$5.90 which is set at a 10% discount to our revised sum-of-the-parts (SOTP) valuation of S$6.59/share. We have lowered our target price for SMM from S$4.85 to S$4.60.

Wilmar International- 1Q13: Results within expectation. More significant contribution from its sugar operations, which only started in late-10.
(WIL SP/BUY/S$3.38/Target: S$3.80)
FY13F PE(x): 13.2
FY14F PE(x): 11.3
1Q13 net profit of US$315.4m (+23.3% yoy, -21.3% qoq). Results within our expectation. The most commendable portion of this
set of results would be the contribution from its sugar division. Excluding the seasonal milling division, pre-tax profit (PBT) from the sugar operations was about the same as the oilseed & grain division, and Wilmar only ventured into sugar in 2010.
Maintain BUY with target price of S$3.80 based on the sum-of-the-parts (SOTP) method, implying a blended PE of 13.6x 2013F below its historical mean of 14.8x 1-year forward PE. 

From Maybank KE:
City Development: Mired By Weak Hotel Earnings; Sell TP $10.00
CIT SP | Mkt Cap USD8.4b | ADTV USD10.1m
We  reiterate  our  SELL  recommendation  on  CDL, as we reduce our
FY13-15F  earnings  forecasts  by  4-18%  on the back of lower expected
earnings from M&C and adjustments made to our profit recognition model.
CDL remains our top SELL, with a target price of SGD10.00.
CDL will report on 13 May. Last week, its subsidiary M&C reported a
disappointing   set  of  1Q13  results  as  the  operating  environment
particularly in Singapore remain challenging. We believe this will be a
drag on CDL’s earnings.
Even though CDL was a dominant force in new home sales in Singapore
during  the first quarter, the earnings will only show up from FY14 and
future  launches  are likely to see slower sell-through rates. We still
prefer the more diversified businesses of its big-cap peers, CapitaLand
and Keppel Land.

Sembcorp Industries: Building a Strong Recurring Base; Buy TP $5.74
SCI SP | Mkt Cap USD7.2b | ADTV USD16.7m
Reiterate  Buy  with  SOTP-based  TP  of SGD5.74. SCI’s pipeline of
utilities  projects  and marine business are well on track to support a
steady 9-12% EPS growth over FY13-15F. Utilities business is trading at
an implied PER of only 6.3x which is unjustifiably low in our opinion.
1Q13  PATMI was flat YoY, accounting for 21% of our FY13F forecast.
This  is  within  expectations  given  the scheduled maintenance of its
cogen plant. We see better performance for subsequent quarters.
Long term value is in the pipeline of utilities projects, scheduled
to  come  onstream over 2013-2016. These are progressing well and would
add to its recurring revenue base, lending more stability to its income stream.

 Wilmar International: Earnings recovery underway; Buy TP $4.60
 WIL SP | Mkt Cap USD17.8b | ADTV USD23.8m
 Maintain BUY with TP of SGD4.60, pegged to 16x FY13F as we keep our
 forecasts largely unchanged.
 1Q13  results were above expectations, with recurring net profit up
 53%  yoy.  We remain convinced that earnings expectations are still too
 low,  and  current  stock  price  level  represents  an opportunity for
 accumulation.
 Even  with  a  decline  in plantation earnings, we expect the other
 businesses to more than pick up the slack. This environment is positive
 for its bigger palm & laurics division.
 
Overseas Education: Patience and Time; Not Rated
OEL SP | Mkt Cap USD235m | ADTV USD1.4m
With  23  years  of  track  record, Overseas Family School (OEL) is
ranked  third  in  revenue  size  in  Foreign System Schools (FSS). The
industry is expected to grow at an estimated 3-year CAGR of 8.9% on the
back of its student population’s CAGR of 13.4% between 2013F and 2015F.
To seize this opportunity, OEL will utilise IPO proceeds to build a new
campus in Pasir Ris to propel its earnings to the next level in 2015.
In  preparation for this move, OEL earnings will be flattish, given
another  rental  hike  is  due  this  July.  Until then, assuming a 50%
dividend  payout,  we estimate its dividend yield would be between 3.9%
and  4.7% between FY13 and FY15F, supported by strong cash flow of over
SGD20m per annum and highly visible capex plans.
The  counter is trading at 13.9x FY12 historical P/E coupled with 4.3% yield.

From DBS:
Sembcorp Industries’ Utilities earnings exceeded estimates
despite lower sales. FY13/14F earnings cut by 13%/2%
mainly for Marine earnings downgrade and fair value loss for
Gallant Venture. TP reduced to S$4.80 (Prev S$ 5.20),
maintain HOLD.

Wilmar’s 1Q13 core earnings of US$314m (+53% y-o-y; -
22% q-o-q) were in line. Oilseeds & Grains Merchandising
and Processing (M&P) performed better than expected; but
was offset by weakness in Plantations and Others. FY13F-15F
earnings tweaked by 1-2% to account for higher Sugar and
Oilseeds & Grains pretax, offset by weaker CPO average
selling price. TP remains unchanged at S$3.72; HOLD rating
maintained for 10% total return. Any weakness should be
opportunity to collect.

3Q13 earnings for ASL Marine were up 21% y-o-y but still
missed estimates. Order wins YTD have been slow but is not
much of a concern; activity will pick up in coming quarters as
yard space frees up. FY13/14F earnings cut 9%/5% due to
losses from engineering division and higher interest expenses.
But earnings recovery story is still intact; maintain BUY with
revised TP of S$0.92 (Prev S$ 0.90).

1Q13 results for ARA Asset Management in line.
Management maintains that they remain confident of hitting
their initial target of a growth of S$2bn in asset under
management (AUM) in 2013 and initiatives are underway to
meet that target. HOLD maintained, TP S$1.95, adjusted to
S$1.76 (post 1-for-10 bonus).

Local Brokerages Stock Call 8 May 2013

From OCBC:
OSIM International: 1Q13 results within expectations
OSIM International (OSIM) reported a 13.2% YoY jump in its 1Q13 PATMI to S$25.1m despite a mild 0.4% increase in revenue to S$150.6m. This formed 25.9% and 22.7% of our FY13 forecasts, respectively. Results were within our expectations as we foresee further contribution from its recently launched uAngel Sofa-Tranzformer and upcoming new high-end massage chair launch (around Jul period). We expect OSIM to continue its strategic drive of launching new innovative products with different price points to cater to a broader group of target consumers. OSIM also declared an interim dividend of 1 S cent/share in 1Q13, similar to 1Q12. We make some minor adjustments after incorporating this latest set of results in our model. Our fair value estimate is raised marginally from S$2.19 to S$2.21, still pegged to 16.4x FY13F EPS. Maintain BUY.

ST Engineering: All-time high order book of S$13.0b
Singapore Technologies Engineering (STE) reported 1Q13 results that were generally in line with ours and consensus expectations. Revenue grew 0.2% YoY to S$1.54b, and PATMI fell 0.3% YoY to S$134m. Highlights include: 1) lack of the biennial Singapore Airshow in 1Q13, which contributed to a S$6.1m drop in share of results of associates and jointly controlled entities, 2) growth in administrative expenses by S$7.9m (7% YoY) due to increased headcount from new Aerospace subsidiaries. STE's order book reached a new high of S$13.0b as of end-Mar 2013 (4Q12: S$12.1b), of which S$3.6b is expected to be delivered in the remainder of 2013. We forecast FY13F EPS of 19.8 S cents. Raising our P/E peg to 22x from 20.7x, given the increased visibility from the record order book, we raise our fair value to S$4.36 from S$4.12. We maintain a HOLD rating on STE and estimate a FY13F dividend yield of 4.1%.  

Wilmar: Decent start to FY13
Wilmar International Limited (WIL) posted revenue of US$10.2b, down 2.6% YoY and 12.2% QoQ, meeting 20.5% of our FY13 forecast; this mainly due to significantly lower selling prices for palm and sugar products. Nevertheless, reported net profit rose 23.3% YoY (but fell 33.9% QoQ) to US$315.4m; excluding non-operating items, core net profit jumped 52.6% to US$313.7m, although down 21.8% QoQ, it still met 23.6% of our full-year forecast. According to management, the improvement came largely from a sharp recovery in its Oilseeds & Grains business; Consumer Products also benefited from volume growth. Going forward, management remains confident that WIL will overcome the difficult environment expected for the rest of 2013. While WIL notes that the bird flu in China will affect meal consumption in the short term, it does not expect to have long-term effect. We will be speaking with management later for more insights; but as results were largely in line, we keep our BUY rating and S$3.90 fair value (still based on 15x FY13F EPS).

From UOB KH:
Overseas Union Enterprise (OUE SP)
1Q13: Rolling Ahead With OUE REIT
Results came in below expectations due to exceptional items and lower-thanexpected
contributions from investment properties. Look ahead to the
hospitality REIT and a potential special dividend as forward catalysts, while
approval for the 160,000sf serviced-apartment conversion in 6 Shenton Way
will provide an acquisition pipeline. Maintain BUY with an increased target of
S$3.63, factoring in a 50bp reduction in office cap rates.

ST Engineering (STE SP)
1Q13: Flat Net Profit But Guidance For Full-year Growth;
OrderBook At Record High Of S$13.0b
Excluding the absence of contribution from a bi-annual air show, PBT would
have risen by 5% yoy. We are encouraged by the growth in its orderbook and
raise our target price by 9% to S$4.50. Maintain HOLD. Entry price is S$4.10.

From Phillip:

Perennial China Retail Trust – Ride on China’s long term consumption and urbanization trend

Recommendation: Accumulate

Previous Close: S$ 0.630

Fair Value: S$ 0.670

·Reported 1Q13 JV net operating income (from Shenyang properties) at $0.55mn (-41.4%y-y), distributable amount at $10.9mn (+2.7%y-y), dividend per unit at S$0.95 (+1.1%y-y).

·Overall occupancy improved in operational Shenyang properties and preleasing activities in Foshan Jihua and Chengdu Qingyang malls are progressing well.

·Sponsor secured for PCRT right of first refusal to acquire block retail component in Beijing Tongzhou Integrated Development Phase2, adding to PCRT’s potential pipeline.

·Maintain Accumulate with unchanged target price at $0.67.

Overseas Union Enterprise Ltd – Results Update

Recommendation: Accumulate

Previous close: S$3.08

Fair value: S$3.24

· OUE 1Q13 revenue increased 8%y-y to $105.4mn

· Recognized one-off finance expenses of ~$13mn in relation to exchange loss arising from a USD loan and its currency swap hedging instrument

· PATMI as a result decreased 92%y-y to $1.8mn

·Maintain Accumulate with unchanged fair value of $3.24

ST Engineering Ltd – Results

Recommendation: Accumulate

Previous close: S$4.37

Fair value: S$4.50

Net income of S$134.0mn (-0.3%y-y).

Record high order book of S$13.0bn.

Positive full year guidance maintained.

 Maintain Accumulate with unchanged TP of S$4.50.

From DBS:

PCRT’s 1Q13 distribution income of S$10.9m was within
expectations, largely coming from the earn-out support as
assets are still in ramp up stage. This translates to a DPU of
0.95Scts. With occupancy at Shenyang Red Star Furniture
Mall, Shenyang Longemont Office and Perennial Jihua Mall
Foshan ramping up, earnings visibility and sustainability has
improved, while downside risk is protected by the remaining
earn out support. We maintain our Buy call on PCRT with
$0.84 TP for its attractive 6% yield and 0.9x P/NAV valuation.

ST Engineering’s 1Q13 net profit of S$134m is in-line with
estimates, after adjusting for one-off items. STE announced a
record order book of S$13bil as of end-1Q13, up from
S$12.1bil at end-FY12, as they took in big orders in 1Q13.
Our analyst assumes YTD order wins to be S$2bil in FY13,
which is about half the figure recorded in FY12. This
underpins steady 6% growth in earnings over FY13/14.
Operating cash flow is strong, gross cash levels exceeded
S$2bn and future dividends appear secure. Maintain BUY
with higher TP of S$4.80 (prev. $4.40).

Sound Global’s 1Q13 net profit of RMB61.5m (-20% y-o-y, -
25% q-o-q) was 10% below forecast despite higher sales.
This is due to higher interest expenses and taxes. Finance
costs skyrocketed to RMB76.8mil from Rmb30mil because
interest for the US$ senior notes surged to S$41.7mil versus
our analyst’s forecast of S$29.3mil due to withholding tax.
The tax rate was also higher at 25% versus our assumption of
15%. Meanwhile, the RMB3bil EPC backlog continues to
offer visibility. Our analyst cuts FY13F/14F to reflect higher
finance cost and reduced valuation peg to 11xFY13 (-0.5SD).
Consequently, TP is lowered to S$0.63 (prev $0.81).
Downgrade to HOLD given limited upside to new TP.

Local Brokerages Stock Call 7 May 2013

From UOB KH:
Global Premium Hotel Ltd-Stable Set Of Results While
Trading Deep Below NAV
(GPHL SP/BUY/S$0.255/Target: S$0.34)
Maintain BUY with a target price of S$0.34, pegged to our
dividend discounted cashflow model (DDM). Currently, the
stock is trading at 0.66x FY12 P/B with a dividend yield of
4.0%.

Yongnam Holdings Ltd (YNH SP, Y02) -
Technical BUY with +26.9% potential return
Last price: S$0.315
Resistance: S$0.40
Support: S$0.29
BUY with a target price of S$0.40 with tight stops placed
below S$0.295. The stock has been trading sideways for
more than three years and has been trending above its 50-
day moving average after having formed a golden cross
earlier. Its Stochastics indicator has hooked up and its MACD
indicator looks poised to form a bullish crossover.
Our retail research has a fundamental BUY with a target price
of S$0.40.

Yamada Green Resources Ltd (YGR SP, MC7) -
Technical BUY with +34.6% potential return
Last price: S$0.26
Resistance: S$0.35
Support: S$0.22
BUY with a target price of S$0.35 with stops placed below
S$0.22. The stock appears to close above its mid Bollinger
band and could break out of the Bollinger band squeeze after
having broken above its downward sloping resistance line. Its
Stochastics 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 also form a bullish crossover as
well.

Olam International (OLAM SP, O32) -
Technical SELL with +9.7% potential return
Last price: S$1.65
Resistance: S$1.75
Support: S$1.49
SELL with a target price of S$1.49 with tight stops placed
above S$1.70. The stock appears to be resisted by its
declining 150-day moving average and prices have closed
below its mid Bollinger band. Its Stochastics indicator
appears to form a bearish crossover and its MACD indicator
appears to form a bearish crossover below its centreline.
Watch to see prices could break below S$1.57 and whether
its RSI indicator could continue to trend down.
Our institutional research has a fundamental BUY with a
target price of S$1.98.

ComfortDelGro Corporation- Diversity shines in the face of adversity.
(CD SP/HOLD/S$1.99/Target: S$1.92)
FY13F PE(x): 17.0
FY14F PE(x): 16.3
Solid returns underpinned by strong FCF. Over the past 10 years, ComfortDelGro (CD) has delivered an average return of 12.1%, of which about 3.6% was attributed to dividends. We estimate that CD’s dividends of about S$140m (6.6 S cents/share) will be
underpinned by its free cash flow (FCF) of more than S$200m p.a. in 2013-15. We forecast FCF yield at 4.9% in 2013 and 7.0% in 2014.
Value-accretive M&As. Management has a good track record of completing accretive acquisitions. As an indication, CD has executed three acquisitions in Australia since 2008 and these companies are performing well, delivering operating margins of
more than 19%.
Maintain HOLD and DCF-derived (cost of equity 6.5% terminal growth 2%) target price of S$1.92. We like CD for its consistent ability to balance the challenging domestic public transport segment with contributions from overseas operations. However, we
see challenges from near-term cost escalation ahead of the roll-out of DTL, while the current yield of 3.3% is also not particularly compelling. Entry price is S$1.67.
 
United Overseas Bank- Key takeaways from Corporate Day.
(UOB SP/NOT RATED/S$21.55)
FY11 PE(x): 15.1
FY12 PE(x): 12.5
UOB held its Corporate Day yesterday, which was well attended by analysts and fund managers. The presentation focused primarily on Basel III capital and liquidity requirements. Head of Capital Management Leong Hong Yew presented on Basel III capital reforms while Head of Balance Sheet Risk Management Heng Li Koon presented on Basel III liquidity reform.
Management expects performance to moderate in subsequent quarters. In particular, the spectacular loans-related fee income seen in 1Q13 is unlikely to be repeated due to the chunky loan booked in Singapore. Overall, fee income is anticipated to grow at
about 15%. Management has maintained its guidance of high single-digit loan growth for 2013. UOB will continue to expand in overseas markets, which provide better margins and stronger growth. Management expects higher growth and stable NIM in Thailand and
Indonesia. It expects muted growth and NIM to be under pressure in Malaysia.

From OCBC:
Ascott Residence Trust: Acquisition of assets in China and Japan
Ascott Residence Trust (ART) has entered into conditional agreements to acquire three prime serviced residences in China and a portfolio of 11 rental housing properties in Japan for S$287.4m at an EBITDA yield of 5.4% on a pro forma basis for FY12. On a pro forma basis, these accretive acquisitions are expected to have increased FY12 distribution per unit by 2.9% from 8.76 S cents to 9.01 S cents. However, with the Japanese Yen currently ~22% weaker in SGD-terms versus the FY12 average, any accretion post-acquisition is likely to be lower. The acquisitions will be funded partly by the S$150m recently raised from an equity placement and the balance will be funded by debt. We maintain our FV of S$1.35 and HOLD rating on ART. 

Swiber Holdings: Still bidding for projects
According to Upstream, Punj Lloyd is poised to win a US$131.45m contract from India’s state-owned ONGC to lay subsea pipelines and execute topside modification work for the B-127 field development in India. We understand that Swiber was the highest bidder for the project with a 13.3% difference from Punj Lloyd’s price quote. Meanwhile, Swiber is still bidding for other work; management has been upbeat regarding its potential pipeline. Despite the positive industry outlook, we would continue to monitor operating margins and cash flows of the group. Meanwhile, the stock price has fallen by about 1.6% YTD vs the STI’s 6.9% rise. Though there is currently a more than 10% upside for the stock, we prefer to maintain our HOLD rating and fair value estimate of S$0.70 on Swiber, pending its 1Q13 results announcement next week


From Maybank KE:
Yongnam Holdings: Positive NDR affirms our conviction BUY, TP $0.45
YNH SP | Mkt Cap USD328m | ADTV USD2.3m
Our recently concluded non-deal roadshow in Singapore drew high levels of interest from institutional fund managers, with the Asian infrastructure theme of particular relevance.
Management expects the resumption of major contract wins in the 2nd half of this year, which we think will be positive stock catalysts.
Yongnam’s consortium is amongst the front-runners for the Myanmar airport projects. We reiterate BUY ahead of 2H13, which is shaping up to be an interesting period with major catalysts in store.

Sarin Technologies: Outshines Itself with New Record, Buy TP $1.66                               SARIN SP | Mkt Cap USD387m | ADTV USD0.2m
Sarin reported a record quarter with 1Q13 revenue of USD20.2m (+3% YoY, +42% QoQ) and net profit of USD8.1m (+3% YoY, +111% QoQ). 1Q13 net profit makes up 26% of our FY13F forecasts.
9 Galaxy systems were delivered in 1Q13, weaker than expected as deliveries were held back by the Passover holiday in Israel and bureaucratic issues in India on their fiscal year end. Sales should accelerate in 2Q13 as orders have almost matched that of 1Q13 already.
We upgrade our TP to SGD1.66, valuing it at a higher FY13F PER multiple of 15x as we grow more confident in its future growth prospects. We forecast a 31% CAGR in EPS over FY13-15F.

Singapore Post: A Good Yield Stock, But Too Expensive, Hold TP $1.28
SPOST SP | Mkt Cap USD2.0b | ADTV USD3.7m

SingPost’s 4QFY3/13 net profit dropped by 15% to SGD26m mainly due to intellectual property rights write-off of SGD5.7m. On full-year basis, net profit dropped by 4% to SGD136m, in line with our estimate of SGD134m.
Cost pressure remains and the investment plan could eat into margins in medium term.
We think the current 4.8% yield is not attractive. Maintain our HOLD rating but change our TP to SGD1.28 as we roll forward our valuation base to FY3/14.

From DBS:
Singapore Post’s FY13 underlying profit of S$140.9m
(+4.1% y-oy) was 3% ahead of our estimates on the back
of better organic and inorganic growth. FY14 is expected
to benefit from full-year contribution of acquired
companies. FY14/15 EPS raised by 14%/19%. Upgrade to
BUY with revised TP of S$1.56 (Prev S$ 1.14) as we see
significant growth in addition to 4.9% yield. Its strong
free cash generation supports dividends.

It has been reported that port workers at HPH Trust’s port
have ended their strike as they accepted a 9.8% wage
increase, in contrast to the 23% increase they were
seeking and the 6%-7% that was offered previously.
Whilst 2Q numbers will be somewhat affected, it is a
positive that this strike is now over. The 9.8% increase in
HK port wages is within our recently adjust numbers and
we maintain our estimates, as well as BUY
recommendation and target price of US$0.87. The stock is
currently offering c. 7% yield.

Super Group has announced its entire disposal of 35.3%
associated company Sun Resources, which develops
property in China which is non-core investment for Super,
for S$26m. Super will book in net gain of S$16m which
will increase earnings and dividend estimate by 14% for
FY13F. Dividend yield will increase from 2.2% to 2.5%
assuming minimum of 50% dividend payout is made in
FY13F. Maintain BUY and S$4.68 TP. 

 

Local Brokerages Stock Call 6 May 2013

From OCBC:
Sembcorp Marine: Pick up a quality stock on the cheap
Sembcorp Marine (SMM) reported a 11.4% YoY rise in revenue to S$1.05b and a 5% increase in net profit to S$118.7m in 1Q13, both accounting for about 20% of our full year estimates and in line with our expectations. Operating margin increased from 10.8% in 4Q12 to 13.7% in 1Q13, and the significant uptick could be partly because revenue recognition of the Sete Brasil drillship in the last quarter was not very significant. Management reiterated that enquiries remain healthy across the various business segments. SMM’s share price has underperformed the STI by about 15% YTD although there has been no change in the company’s fundamentals. In our view, investors seeking to hold a quality company for the longer term would find value in SMM. Maintain BUY with S$5.64 fair value estimate. 

Roxy-Pacific Holdings: Sales at new launches to be key
ROXY reported 1Q13 PATMI of S$11.7m – up 29% YoY mostly due to a stronger contribution from property development. This forms 15% of our FY13 forecast (S$78.0m) and is judged to be mostly within expectations, given that we expect a “lumpy” contribution later in FY13 from Wis@Changi (COC recognition). The 171-unit Jade Residences was launched in Apr and 44% of the units have been sold to date  at ~S1.6k psf. All considered, we believe this is a decent launch performance. We also expect WhiteHaven at Pasir Panjang to launch for sales soon, with Sophia Mansions to follow. At this juncture, maintain HOLD as we await more clarity on execution and sales performance at these first set of launches after latest Jan-13 cooling measures. Our fair value estimate is unchanged at S$0.61. (Eli Lee)

Cosco Corp (S’pore): Downgrade to SELL - missed expectations

Summary: COSCO Corp (S’pore)’s 1Q13 revenue and net profit attributable to shareholders came in at S$733m (-25% YoY) and S$9.7m (-65% YoY) respectively. Turnover from shipyard operations, consisting of ship repair and shipbuilding, decreased by 26% YoY to S$719m in 1Q13 (1Q12: S$966m), while turnover for dry bulk shipping and other businesses increased by 8% YoY to S$13.8m (1Q12: S$12.8m). All in all, 1Q13 performance was disappointing with PATMI forming only about 9-10% of ours and consensus’ FY13F estimates. We now cut our FY13F-14F PATMI estimates by 50-60% and pare our fair value estimates to S$0.76 (previously S$0.90) on 1.3x P/B. We expect the street to do the same. Downgrade from Hold to SELL. 
 
Singapore Post: Expenses continue to rise
Singapore Post (SingPost) reported a 25.0% YoY rise in revenue to S$182.5m but saw a 14.6% drop in net profit to S$26.1m in 4Q13, bringing full year net profit to S$136.5m, accounting for about 94% of our full year estimate. Excluding one-off items such as a S$5.7m write-off of intangible assets, underlying net profit was S$141.0m, which was 2.5% shy of our forecast. Volume-related and admin expenses continued to rise in the last quarter, such that total operating expenses rose 17.2% QoQ. EBITDA margin fell from 31.0% in 4QFY12 and 33.4% in 3QFY13 to 25.8% in 4QFY13 as a result. In line with its usual practice, the group has proposed a final dividend of 2.5 S cents/share, bringing the full year payout to 6.25 S cents. Pending an analyst briefing later, we maintain our HOLD rating but put our fair value estimate of S$1.23 under review.

Vard Holdings: Secures NOK400m contract
Vard Holdings, previously known as STX OSV, secured a contract with Island Offshore for the construction of one advanced offshore support vessel worth approximately NOK400m (US$70m). Delivery is scheduled from Vard Brevik in Norway in 3Q2014. Meanwhile, the group is also expected to report its 1Q results on 14 May 2013. We currently have a BUY rating with S$1.52 fair value estimate. 

From UOB KH:
CapitaCommercial Trust (CCT SP, C61U) –
Improving outlook on the office sector
Last price: S$1.70
Target Price: S$2.00
CCT’s 1Q13 results were in line on the back of strong leasing
momentum. 1Q13 leases already matched the total signed for
the full-year 2012. 63% of leases expiring in 2013 have also
been renewed. Average portfolio rent increased 2.5% qoq and
we expect positive reversions to continue over the rest of the
year. Near-term headwinds from the expiry of yield protection
at One George Street and lower occupancy at Capital Tower will
be mitigated by strong rental reversions and rising occupancy at
6 Battery Road. CCT has a substantial acquisition headroom of
S$1.1b with its conservative gearing of 30%. Asset
enhancement works remain on track and occupancies should
continue to improve. CCT is our top pick in the office segment,
where we anticipate higher growth dynamics going forward. We
have a BUY and target price of S$2.00.
Technically, the stock appears to be supported near S$1.53 and
may continue to rise gradually towards S$1.90.

CDL Hospitality Trust (CDREIT SP, J85) –
Pick-up in 2H13 on more events, new attractions
Last price: S$1.985
Target Price: S$2.36
CDREIT reported a slightly weaker performance in 1Q13, in line
with its earlier guidance. We see these results as one-off and
expect a pick-up in room rates and occupancies in 2H13 on the
back of more major events and new attractions. The recent
yield-accretive acquisition of a resort in the Maldives should also
help boost yields. Post this acquisition, CDREIT’s gearing
remains low at 28%, among the lowest in S-REITs. This
presents a debt headroom of more than S$400m. Management
noted that Singapore will remain its focus market for
acquisitions. Maintain BUY and target price of S$2.36. CDREIT is
currently trading at dividend yields of more than 5.5%.
Technically, the stock appears to be trading sideways between
S$1.90 and S$2.13.

Starhill Global REIT (SGREIT SP, P40U) –
Retail to remain stable, rentals resilient
Last price: S$0.955
Target Price: S$1.06
Starhill’s 1Q13 results were within expectations, boosted by
accumulated rental arrears from Toshin. From our management
luncheon, the team highlighted its competitive advantage in
bringing in newer brands, high-end tenants, and directly
engaging with the brand principals. The acquisition pipeline
includes underperforming malls in Singapore, properties in
Kuala Lumpur, and assets in key cities in Australia. Starhill has
a debt headroom of S$450m from its current gearing of 30.5%.
Although management was cautious about further potential
upside following the Toshin review, we believe a modest
increase is still achievable as underlying rentals are close to half
that of neighbouring Wisma. We expect positive reversions as
well as over 50% of office leases expiring in 2013 have been
renewed or pre-committed. Our BUY recommendation comes
with a target price of S$1.06.
Technically, the stock appears to be well supported near S$0.85
and prices could be trending towards S$1.05. 

COSCO Corp (S)- 1Q13: From bad to worse.
(COS SP/SELL/S$0.87/Target: S$0.88)
FY13F PE(x): 39.0
FY14F PE(x): 30.0
From bad to worse. COSCO Corp’s (COSCO) 1Q13 net profit of S$9.7m was well below expectations. Net profit declined by 65% yoy because of: a) a 25% fall on lower turnover. Although this lower shipbuilding turnover (-74% yoy) in 1Q13 had been expected
as COSCO has been seeing a decrease in shipbuilding order wins for some time, the 26% fall in shiprepair turnover came as a surprise. The shiprepair business suffered further because of a continued poor shipping market and intense competition because
Chinese yards’ orderbooks are generally low, b) lower sale of scrap materials of S$7.5m in 1Q13 vs S$16.3m in 1Q12, c) a forex loss of S$4.3m in 1Q13 vs a loss of S$9.7m in 1Q12, and d) higher interest expense of S$27.3m vs S$21.8m previously. Shipping
turnover (+8% yoy) appears to have bottomed.
No light at end of the tunnel. Shipbuilding margins are expected to come under pressure as the group is executing low-margin shipbuilding contracts secured in the last three years during the shipping slump. For new offshore product types, as a relatively
new entrant, COSCO expects to incur higher costs during the execution of these new product types.
Maintain SELL. We tweak our target price marginally from S$0.86 to S$0.88, based on 1.5x P/B. Current NAV is 58.62 Scents/share.

Sembcorp Marine- 1Q13: Mixed signals.
(SMM SP/HOLD/S$4.26/Target: S$4.60)
FY13F PE(x): 17.1
FY14F PE(x): 14.5
Below consensus expectation. Sembcorp Marine (SMM) reported a net profit of S$119m (+5% yoy) on the back of a turnover of
S$1,050m (+11% yoy). 1Q13 net profit appears to be below consensus expectation, but within our expectation. 1Q13 net profit
accounts for 20% of consensus’ 2013 forecast of S$604m, but 23% of our 2013 forecast of S$516m.
Our 2013-15 earnings forecasts are largely unchanged. We maintain our contract win assumptions of S$5b p.a. for 2013-15 (2012: S$11b). Ytd, SMM has won S$1.7b worth of new contracts. Orderbook stands at S$13.6b with project deliveries stretching
to 2019. The seven drillships for Sete Brasil make up 49% of SMM’s orderbook.
Maintain HOLD. We lower our target price marginally from S$4.85 to S$4.60 due to valuations for SMM’s own shipyard business
(15x 2014F earnings vs 16x previously) and CSG following a cut in the latter’s earnings. We have widened SMM’s shipyard valuation vs Keppel’s (we have ascribed an 18x 2014F PE valuation to Keppel). Keppel’s O&M margins appear to be more resilient.
We suggest entry at S$4.10. 

From DBS:
SembCorp Marine’s 1Q13 results below expectations, net
profit up only 5% on slower than expected revenue
recognition. Our analyst has cut FY13/14 net earnings by
8%/4%, factoring in slower revenue recognition. Healthy rig
demand but keen competition could cap margins recovery.
Maintain HOLD with a lower TP of S$4.70 (Prev S$ 5.00).

Cosco Corporation’s 1Q13 results were way below
consensus. The excess shipbuilding capacity, weak shipping
market and the recent yen depreciation which has wiped out
cost advantages of the Chinese yards and may lead to more
bulk carrier orders being channeled to Japan, have prompted
us to cut FY13/14F earnings by 43/44%. Maintain FULLY
VALUED; TP reduced to S$0.75 (Prev S$ 0.80). Weak industry
prospects will continue to drag on earnings over the next 2
years. 

Local Brokerages Stock Call 3 May 2013

From OCBC:
UOB: Above expectations 1Q
UOB Group posted 1Q13 net earnings of S$722m, ahead of consensus estimate. This was buoyed by higher Non-Interest Income, which rose 12% YoY and 13% QoQ to S$708m. Fee & Commission Income jumped 17% QoQ or 25% YoY to S$453m, supported by strong double-digit growth from loans (+63%), fund management (+19%) and Investment (+18%). As 1Q accounted for about 25% of our full year estimate, we made very slight adjustments to our FY13 earnings. Based on P/B of 1.5x, we raised our fair value estimate from S$21.30 to S$22.97. While we continue to like UOB for its good cost controls and strong quarterly performance, the stock has outperformed and appreciated some 11% YTD. It is now trading close to our fair value estimate. As such, we downgrade our rating to HOLD. 
 
Genting Singapore: 2013 outlook more cautious
Genting Singapore (GS) reported 1Q13 revenue of S$669.6m, down 15% YoY and also 16% QoQ, hit by much weaker win percentage (2.12% versus 2.85% theoretical) in the premium players’ business; net profit posted a decline of 44% YoY and 13% QoQ to S$115.9m. All in, a pretty muted set of numbers, as top-line only met 20% of our original FY13 forecast while bottom-line met 18% of our full-year number. Going forward, management has turned slightly more cautious, citing the still uncertain global economic outlook, especially with the recent muted economic data coming out of China. We pare our FY13 revenue estimates by 10% and core earnings by 16%. As such, our DCF-based fair value also slips to S$1.41 from S$1.52 previously. Recent run-up in share price seems slightly over-done; hence we downgrade to SELL from Hold on valuation grounds. However, we would buyers closer to S$1.30 or lower. Longer-term catalyst could come from a potential IR license overseas in markets like Japan.

Lippo Malls Indonesia Retail Trust: 1Q13 results in line
LMIRT posted 1Q13 gross rental income of S$39.4m, up 29.3% YoY. The increase was mainly due to the acquisition of the six new malls in 4Q12, and positive rental reversions for the existing malls. The higher gross rental income was partially offset by the effect of FX rates used for translating into SGD revenues denominated in IDR. Results for the quarter were in line with our and consensus expectations; DPU of 0.89 S cent formed 25% of ours and 26% of the street's FY13 estimate. We maintain our fair value of S$0.52 and HOLD rating on LMIRT. We estimate a FY13F yield of 6.7%. 

From UOB KH:
China Aviation Oil- Optimisation Bearing Fruit; Upgrade
To Buy (CAO SP/BUY/S$1.02/Target: S$1.30)
Upgrade to BUY with a higher target price of S$1.30. We
believe optimisation of the trading segment and an increase in
strategic acquisition seem to be bearing fruit with a 43.6%
jump in gross profit. 

Silverlake Axis (SILV SP, 5CP) -
Technical BUY with +16.1% potential return
Last price: S$0.715
Resistance: S$0.83
Support: S$0.65
Maintain BUY with a target price of S$0.83 with stops placed
below S$0.66. The stock has been trending above its mid
Bollinger band and appears to be supported above its rising
35-day moving average. Its MACD indicator is still trading
above its centreline and looks poised to form a bullish
crossover. Its RSI indicator is still above 60.
Our retail research has a fundamental BUY with a target price
of S$0.91.

Sarin Technologies (SARIN SP, U77) -
Technical BUY with +16.2% potential return
Last price: S$1.42
Resistance: S$1.65
Support: S$1.35
BUY with a target price of S$1.65 with stops placed below
S$1.35. The stock appears to trending above its 30-day
moving average and is likely to trade higher should prices
break above S$1.48. Its Stochastics indicator has formed a
bullish crossover and RSI indicator has turned up above a
reading of 40. Watch to see if its MACD indicator could form a
bullish crossover.


M1 (M1 SP, B2F) –
Technical SELL with +7.7% potential return
Last price: S$3.36
Resistance: S$3.40
Support: S$3.10
BUY with a target price of S$3.10 with stops placed above
S$3.45. Prices are likely to trend lower should there be a
follow through sell after a potential bearish harami pattern
has formed. Its RSI indicator has turned down below a
reading of 80. Watch to see if its MACD indicator could form a
bearish crossover and whether its mid Bollinger band could
act as a support.
Our institutional research has a fundamental HOLD with a
target price of S$3.04. 

Genting Singapore- 1Q13: We expect share price to react
to an exceptionally weak EBITDA, although rolling chip
volume increases. (GENS SP/SELL/S$1.61/Target:
S$1.17)
Maintain SELL and target price of S$1.17, pegged at 10x 2013F
EV/EBITDA. We reckon the time is ripe to take profit 

United Overseas Bank- 1Q13: Strong organic growth plus
tight cost control. (UOB SP/NOT RATED/S$22.00)
UOB reported a net profit of S$722m (+4.9% yoy, +3.8% qoq)
for 1Q13, above consensus of S$664m.

Ascott Residence Trust- Focus returns back to Asia. (ART
SP/BUY/S$1.41/Target: S$1.60)
Maintain BUY with a higher target price S$1.60 (from S$1.57),
based on a two-stage dividend discount model

Singapore Airlines- 4QFY13 results preview: Returning to
profitability on better loads and lower costs. Upgrade to
BUY on benign fuel outlook. (SIA SP/HOLD/S$11.10/Target: S$13.50)
We upgrade the stock to BUY and increase our target price by
26% to S$13.50, valuing the stock at 0.9x FY14F book value

From Lim & Tan:
Despite markets¡¦ expectation of a positive read through
from Las Vegas Sands earnings results, Genting Singapore
posted 1Q ¡¥13 revenue of S$669.6 million and adjusted 
EBITDA of S$249.7 million which were way below analysts
estimates.
The dip in gaming revenue (-20.5% y-o-y) was mainly
caused by a much weaker win rate within its VIP
business, despite a significant increase in the VIPs¡¦
rolling volume.
Nonetheless, Genting Singapore¡¦s non-gaming
business continued to do well, growing 17.2% y-o-y.
In particular, its recently opened Marine Life Park
remained popular and attracted approximately 7,400
visitors daily, whilst its flagship Universal Studios
Singapore recorded an average daily visitation of 8,400.
In addition, the firm¡¦s hotel business continued to
experience high occupancy rate of 92%, with an average
room rate of S$404.
The Group also continued to maintain a solid balance
sheet, with a net cash position
Given the stock¡¦s run-up leading to its earnings result,
we are likely to see considerable selling today. A strong
technical support level would be at around S$1.38-1.40. 

From Maybank:
DBS Group: A Strong 1Q13, TP Raised; Maintain Buy, TP $20.00
DBS SP | Mkt Cap USD34.7b | ADTV USD52.3m
Maintain BUY with a revised Street-high TP of SGD20, pegged to 1.4x FY13 P/BV (1.3x previously), in-line with peer averages.
DBS’ 1Q13 results were above expectations - core net profit of SGD950m was 27% of our full-year forecast and consensus due to strong fee and trading income momentum.
Valuations are still attractive with the stock trading at a prospective FY13 PER of 11.9x relative to 13.0x for peers and a long-term mean of 12.2x.
The stock also trades at a prospective FY13 P/BV of 1.3x (ROE: 11.0%) vs 1.4x for peers (ROE: 11.7%), which we believe is unjustified, given the more favourable outlook for DBS.

  
Genting Singapore: Upside Narrowing; Downgrade To Hold, TP $1.70
GENS SP | Mkt Cap USD16b | ADTV USD37m
Ø Downgrade to HOLD with new TP of SGD1.70. At 12.7x 1-year forward EV/EBITDA, GENS is trading at par to the Macau casino sector mean. We prefer 52% shareholder, Genting (GENT MK, BUY, TP: MYR11.50) for its cheaper valuations of 16x FY13 PER.
Ø GENS reported disappointing 1Q13 results due to a poor VIP win rate of 2.12%. Although 1Q13 VIP volume surged 38% YoY, this momentum may not last.
Ø We raise our earnings estimates by 2-3% on higher FY13 VIP volume growth forecast of 20% (10% previously) and EV/EBITDA based TP by 2% to SGD1.70 but with only 6% upside currently, we downgrade GENS to HOLD from Buy.
 
UOB: Decent 1Q13, Moderation Expected; Sell TP $20.50
UOB SP | Mkt Cap USD28.1b | ADTV USD38.6m
Our contrarian SELL call is maintained but with a raised TP of SGD20.50 on a FY13 P/BV of 1.3x (1.2x previously) amid higher peer valuations, but with a discount to reflect the risk of a larger impact to UOB from a slowdown in mortgage origination in 2H13, given its larger property exposure.
UOB’s 1Q13 net profit of SGD722m was broadly in line, at 26% of our full-year and 27% of consensus.
With expectations of a moderation in earnings over the subsequent quarters, our forecasts are maintained. We expect UOB’s earnings to be flat this year on the back of lower trading income and ongoing NIM compression.

From DBS:
Genting Singapore’s 1Q13 results were below expectations,
management is wary on VIP growth and visitor arrivals.
Downgrade to HOLD (from Buy), TP revised to S$1.71 (from
S$1.88) after cutting FY13-15F earnings by 11-21% on slower
VIP growth and normalising win rate. The recent strong rally is
likely to attract profit-taking. Potential Japan IR win could rerate
GENS but it may take another 2 years for the bidding
process even if Japan liberalises gaming in November.

1Q13 earnings for UOB came in above consensus but in line
with our estimates. Higher fee income and lower provisions
offset NIM decline; ex-chunky loan deal, loans grew 3-4% qo-
q. Maintain HOLD and S$20.10 TP.

Ascott Residence Trust is proposing to acquire 3 serviced
residences properties in China and 11 Rental Housing
Properties in Japan for S$287.4m from its sponsor, Ascott
Group. The properties will be acquired at a slight discount to
valuers’ valuation and the purchase price implies an initial
EBITDA yield of 5.4%. The anticipated acquisitions are to
refocus its exposure into high growth Asia and are accretive
to earnings. Maintain BUY and TP S$1.53.

AusGroup announced that Karara Mining (KML) (a company
incorporated in Perth, Western Australia) has withheld
progress payments of about AU$21.7m for structural,
mechanical and piping installation works carried out by
AusGroup’s wholly-owned subsidiary, AGC Industries (AGC)
at KML’s Karara Iron Ore Project in Western Australia
pursuant to a 2012 contract entered into between AGC and
KML. AGC is actively liaising with KML management to
attempt to resolve the current situation.

EMAS AMC, the subsea services arm of Ezra Holdings, has
secured a contract from Statoil for the Smørbukk South
Extension project in the Norwegian Sea. Valued at
approximately US$75m and expected to last through
2015, the project award is a SURF (subsea construction,
umbilicals, risers and flowlines) EPCI (engineering,
procurement, construction and installation) contract. This
is Ezra's 4th project win from Statoil. With this contract,
we estimate EMAS AMC has secured close to US$835m
of subsea work YTD in FY13 (Aug YE) vs. our full-year
assumption of US$1bn, and current backlog in the subsea
services division should stand at over US$1.1bn. Subsea
order win momentum has continued to build well in
recent months and the addition of two more subsea
vessels in July and August will further position Ezra to ride
on the surging subsea activity levels. No change to our
earnings estimates, given that the contract win is within
our expectations. Maintain BUY and TP of S$1.56.