Local Brokerages Stock Call 14 May 2013

From OCBC:
Golden Agri-Resources: Upgrade to BUY on valuation ground
Golden Agri-Resources (GAR) posted 1Q13 revenue of US$1430.1m, weighed down by lower CPO prices; but still managed to meet 22% of our full-year forecast. We estimate that core earnings came in at around US$113m, down 30% YoY but up 176% QoQ, and also met 23% of our FY13 forecast. Management noted that the better showing came from lower operating expenses, improved performance at its China operations and the sell-down of inventory, which came as a big relief. While CPO prices may still remain weak in the near term, headwinds appear to be dissipating; management is also remaining fairly upbeat about its prospects as it continues to expand its integrated operation capabilities to benefit from the firm industry outlook. Coupled with the recent fall in share price, GAR now looks relatively attractive with a 19% upside to our unchanged S$0.63 fair value (based on 12.5x FY13F EPS). Hence from a valuation standpoint, we upgrade our call from Hold to BUY. 

City Developments Limited: Still executing well
1Q13 PATMI came in at S$137.7m, down 12% YoY mostly due to the absence of a disposal gain from the Tagore Avenue warehouse sale in 1Q12, partially offset by gains from strata units sales in non-core industrial assets. First quarter PATMI now makes up 26% of our full year forecast, which we judge to be in line with expectations. In 1Q13, the group launched two projects, the 912-unit D’Nest and 868-unit Bartley Ridge, of which 87% and 62% of total units have been sold – a reasonably firm set of performances. The group’s hotel subsidiary, M&C, reported a soft set of first quarter numbers, with 1Q13 PATMI down 29% YoY due to a room refurbishment program that removed over 100k room nights and more difficult sector conditions. Maintain HOLD on CDL with an unchanged fair value estimate of S$12.04 (15% RNAV disc.).

Goodpack Limited: Catalyst delayed
Goodpack’s 3Q13 results met our expectations with revenue growing 3.0% YoY to US$44.8m on the back of continued gains from its synthetic rubber segment. Although operating expenses fell slightly and operating profit increased by 7.5% to US$16.3m, higher financing expenses caused PATMI for the quarter to fall 5.9% to US$10.9m. Entering 4Q13, we reduce our revenue projections following a delay in IBC usage for two new synthetic rubber contract wins back in 2Q13 but still expect a decent showing for its 4Q13 results. While we deem its recent share price decline to be overdone, our fair value falls to S$1.80 (S$1.95 previously) due to the lack of a near-term catalyst. Downgrade to HOLD.

Nam Cheong: 1Q net profit up 8% to RM35.8m
Nam Cheong Limited’s revenue and net profit increased by 14% and 8% YoY to RM234.7m and RM35.8m respectively. Gross margin declined to 18.6% from 22.6% in the year-ago period, mainly due to lower utilization of its vessel fleet. The group also had a disposal gain of RM2.8m, relating to one SSV. Separately, Nam Cheong announced the sale of five vessels worth US$110m, relating to one 5,150 bhp AHTS and four PSVs. The group, which already has an existing net order-book of RM1.3b, plans to expand its shipbuilding programme to 28 vessels for 2014 (2013: 19 vessels). We continue to like the group for its growth profile and keep our BUY rating and fair value estimate of S$0.30 unchanged.

Viz Branz Limited: Best operating margins since FY10
Viz Branz’s 3Q13 results was in-line with expectations with a decline in revenue offset by continued margin improvements due to the favourable raw material cost environment. While we lowered our FY13 projections to account for the seasonally weaker 4Q13, we expect margin improvements to persist and VB should remain on track to record a better FY13 performance in terms of PATMI growth. In addition, its growth prospects in its key China market remain decent. We leave our fair value estimate unchanged at S$0.74 and keep our BUY rating on the counter. In terms of the likelihood of a GO, we remain steadfast in our assertion that it will materialize, albeit at a later date and with a potentially different acquirer. 

From Maybank KE:
Super Group: Fresh coffee, Fresh perspective; Buy, TP $6.30
SUPER SP | Mkt Cap USD2.2b | ADTV USD2.0m
1Q13  results were within expectations. Recurring net profit growth of
30% yoy were driven by higher revenue and better margins.
While  we  expect  margins  to moderate over the next few quarters, we
still expect strength due to 1) higher-value products coming on stream and
economies of scale.
With  resilient  earnings  and  a  free  cash  flow  which  will  grow
exponentially  from next year, we think it is now appropriate to value the
stock  on  a  DCF  basis, which yields a fresh TP of SGD6.30, implying 30%
upside from here.
 
Bumitama: Off To a Slow Start; Buy, TP $1.24
BAL SP | Mkt Cap USD1.4b | ADTV USD0.8m
1Q  is  traditionally  the  weakest quarter in terms of FFB output.
Coupled  with  low  CPO  ASP  achieved,  BAL’s  1Q13 core net profit of
IDR152m  (-20%  QoQ,  -20%  YoY)  met  18% and 16% of our and consensus
estimates   –   within  our  expectations  but  slightly  below  street
estimates.
We  expect  stronger  performance  in  2H13  on seasonally stronger
production and higher CPO ASP to drive earnings growth for 2013.
Maintain  BUY with unchanged TP of SGD1.24 TP on 16x FY14 PER, with
implied 0.9x PEG.
 
Wing Tai Holdings: “Verticas” Earnings Climb; Buy, TP $2.64
WINGT SP | Mkt Cap USD1.5b | ADTV USD1.8m
We  reiterate  our  BUY  recommendation  on  Wing Tai as its 3QFYJun13
results  beat  all expectations with the surprise contribution from its KL
project, Verticas Residences. Our target price has been raised to SGD2.64.
On  the back of the contributions from Verticas Residences, Wing Tai’s
9MFYJun13  PATMI  came in at 115% of our Street-high estimate, and 124% of
consensus forecasts. We have raised our FYJun13 forecast by 36%.
Sales at Helios Residences remained slow but steady (~10 units sold
in  the  quarter).  At  0.75x  P/B and 0.6x P/RNAV, we believe Wing Tai
remains very undervalued.
 
China Minzhong: Volume Growth to Offset Margin Decline; Buy, TP $1.36
MINZ SP | Mkt Cap USD541.4m | ADTV USD7.9m
We  continue  to  like Minzhong’s growth outlook and the alliance with
Indofood  post its 3Q FY13 results. Maintain our BUY rating and our target
price at SGD1.36.
3QFY13  bottom line growth of 6% was disappointing. But we believe the
revenue  growth  could  be  more than offsetting the decline in margin. We
still look at double digit net profit growth going forward.
Current 3.8x FY14 PER seems not justified for a double-digit growth
company  in  our  view.  The  next  catalyst  for the stock will be the
potential dividends next quarter.
 
Goodpack: Another slow quarter; Hold, TP $1.75
GPACK SP | Mkt Cap USD773.4m | ADTV USD0.4m
3Q13 results were below expectations, with revenue growth continuing to
decelerate on slower business activities in existing segments.
Revenue  grew  3%  yoy, while net profit declined 6% yoy, despite cost
savings coming through from more efficiency in US and Europe.
With  no  earnings growth visibility nor clear catalyst in place at
least  over the next 1-3 quarters, the stock is likely to underperform.
Our  new  TP of SGD1.75 is pegged to 17x FY13F, in-line with historical
5-year average. 

From DBS:
Singapore banks have rallied strongly after the release of
1Q13 results. But our banking analyst believes this is as
strong as it could get fundamentally. All eyes will remain
on NIM for any upside surprises as other P&L levers are
largely stretched. Consensus has raised earnings
expectations to show 1% growth from 1% earnings
contraction before. We are keeping our 3% earnings
growth projection for 2013. Expect some consolidation in
the near term; take profit. We believe regionalisation
efforts would re-rate the Singapore banks in the longer
term. Maintain HOLD on OCBC; TP at S$11.50. We have a
Fully Valued call on UOB, TP S$20.10.

3Q13 bottomline for Goodpack was below on lower fleet
expansion and Intermediate Bulk Containers (IBC)
turnaround. We have trimmed FY13/14F estimates by
3%/7% on slower demand recovery. Nevertheless, we
remain optimistic on Goodpack’s fundamentals and
growth prospects from FY14 on the back of market share
gains in synthetic rubber (SR, especially in Russia and
Singapore) and autopart segments. While earnings are
expected to grow 19% q-o-q going into the seasonally
stronger 4Q with contribution from non-rubber products
and maiden Russian SR sales, we would like to await
macro and industry data for cues. Downgrade to HOLD,
with a lower TP of S$1.90 (Prev S$ 1.95).

Nam Cheong’s 1Q13 earnings were up 8% y-o-y to
RM36m, largely in line. The pace of vessel sales is ahead
of expectations. The latest new vessel sales contracts for 5
vessels worth US$110m improve revenue visibility further.
FY13/14F earnings were raised by 4%/14%. The Group
remains well on track to deliver on its newbuild
programme of 19 vessels in FY13 and 25 vessels in FY14,
underpinning net profit growth trajectory of 20% CAGR
over FY12-14. Maintain BUY with higher TP of S$0.36
(Prev S$ 0.30).

1Q13 core net profit of Rp151.5bn for Bumitama Agri
made up only 15% of our initial FY13F. High cost of
logistics and jump in third party FFB pushed costs up.
FY13F/14F/15F earnings cut by 13%/6%/3%; TP lowered
to S$1.12 (Prev S$ 1.18). HOLD maintained for 11%
upside to revised TP.

First Resources reported 1Q13 core net profit of
US$63.6m (+25% y-o-y; -17% q-o-q). This represented
35% of our full year forecast - ahead of expectations.
Despite the strong results, we are putting our forecasts
under review due to lower than expected yields. Will
provide more updates.

1Q13 earnings for Super Group were in line, driven by
higher gross margins and ingredients segment. FY12-
FY14F 20% CAGR growth will be supported by Branded
Consumer and Food Ingredient segments. Maintain Buy
with higher TP of S$5.35 (Prev S$ 4.68).

1Q13 earnings for City Developments dipped 12% y-o-y,
and account for 20% of our full year forecast. The drag
came largely from lower residential and hotel revenue.
Looking ahead, residential activities offer visible earnings
stream while hotel operations continue to face
challenges. Maintain Hold, TP S$12.33.

Wing Tai reported 3Q13 net profit of $94.6m, bringing
9M13 bottomline to $255.3m, ahead of our expectations.
Looking ahead, the group plans to market The Tembusu,
a 337-unit freehold development along old Tampines Rd
in the coming months. In addition, the group has another
project along Prince Charles Crescent (JV with UEL,
Metro) that is scheduled to be marketed in coming
months. This provides earnings and cashflow visibility for
FY14. Current TP of $2.33 under review, likely to remain
Buy with a slightly higher TP. 


 

Local Brokerages Stock Call 13 May 2013

From OCBC:
ECS Holdings: Double-digit growth delivered
Summary: ECS Holdings (ECS) reported a positive set of 1Q13 results which exceeded our expectations. Estimated core PATMI jumped 28.6% YoY to S$8.5m on the back of a 20.9% YoY increase in revenue to S$1,090.3m. The group managed to record healthy YoY revenue and EBIT growth for all of its core segments. However, its gross margin slipped 0.4ppt to 3.7% in 1Q13 due largely to a change in product mix. We lift our FY13 and FY14 revenue projections by 8.9% and 10.6%, respectively. But as we also lower our margin assumptions slightly, our FY13 and FY14 core PATMI estimates are raised by a smaller magnitude of 4.2% each. Correspondingly, our fair value estimate increases from S$0.53 to S$0.57, now pegged to 6x FY13F EPS (previously 5.8x).  As ECS is trading at an attractive 5.0x and 0.52x FY13F PER and P/NTA, respectively, we upgrade the stock from Hold to BUY. 
 
UOL Group: Proposed delisting of Pan Pacific Hotels
Summary: UOL’s 1Q13 PATMI decreased 15% YoY to S$71.7m mostly due to a weak contribution from its hotel segment. 1Q earnings now make up 19% of our full-year forecast, which we judge to be generally within expectations and is tracking marginally below due to lumpy progress recognition at development projects. In addition, the group has made a cash offer of S$2.55 per share (9% premium over last transacted price) to delist PPHG (Pan Pacific Hotels Group), conditional on the shareholder approval. We see this as a sensible move which would consolidate the group’s hotel assets at a fairly reasonable price. That said, from our discussions with management, it appears unlikely that material operating changes, i.e., a major re-structuring or REIT listing, are in store for PPHG assets. Maintain HOLD with a higher fair value estimate of S$7.16 (20% RNAV disc.), versus S$6.01 previously, as we work into our valuation model higher prices of listed holdings and the Sengkang acquisition.

Midas Holdings: Expects net loss in 1Q13
Summary: Midas Holdings (Midas) has issued a negative profit guidance prior to its upcoming 1Q13 results release, saying that it expects to report an unaudited net loss. This is mainly due to lower revenue and gross profit margin given the change in product mix and weaker utilisation rates, as well as higher operating expenses and finance costs and a share of loss from its associated company, Nanjing SR Puzhen Rail Transport (NPRT). This profit guidance comes as no surprise to us as we had forecasted Midas to record a net loss of CNY3.2m in 1Q13. We still expect Midas to stage a recovery in 2H13, but the strength of this recovery will be dependent on the developments in China’s high-speed railway sector. Midas will report its 1Q13 results on 14 May after trading hours, while an analyst conference call has been scheduled the day after. We will provide more updates then. For now, we have a BUY rating and S$0.595 fair value estimate on the stock. 
 
Biosensors International Group: Proposed acquisition of assets from Spectrum Dynamics
Summary: Biosensors International Group (BIG) announced this morning that it has entered into an agreement to acquire substantially all the assets of Spectrum Dynamics (SD), which is a privately held company. SD is a medical imaging and clinical applications company involved in the designing, developing, manufacturing and distribution of medical imaging systems and technology in multiple fields. The initial deal consideration is US$51.1m (book value of SD’s assets valued at ~US$7.3m as at 31 Mar 2013), and will be funded by internal resources. Subsequent performance payments of US$4m and US$15m may be paid to SD if certain performance benchmarks are met in 2014 and 2016, respectively. We are positive on this move as it allows BIG to diversify its product offerings and revenue stream. But as the acquisition is not expected to have a material impact on the EPS and NTA of BIG in FY14, we leave our forecasts unchanged for now. Maintain BUY and S$1.60 fair value estimate on BIG.
  
From Lim & Tan:
We are downgrading Midas (50.5 cents, unchanged)
to Neutral as we expect downward revisions in
consensus profit estimates by 20% to Rmb100mln
after the company warned that it expects to be loss
making in 1Q13, reversing last year and last quarter¡¦s
profit of Rmb16mln as a result of lower sales, lower
margins due to weaker product mix and increased
fixed costs, as well as larger losses from 32.5% owned
Nanjing Puzhen and higher operating costs.

We are upgrading our recommendation on China
Minzhong ($1.10, up 4 cents) to Neutral from Sell
as the stock has declined 11% since our last sell
recommendation in early March13 and while its 3Q
to Mar13 profit growth of 5.9% to Rmb255mln,
bringing 9 months to Mar13 profit up 17% to
Rmb593mln was about in line with expectations as
solid top-line growth of 28% yoy was eroded by cost
inflation in China. Expectations of a final dividend
payment for full year to June13, however small, could
provide some support.

 We are upgrading our recommendation on Yamada
(26 cents, up 1/2 cent) to Neutral from Sell as the stock
has declined 15% since our last sell recommendation
in Mar13 and while 3Q to Mar13 profit has continued
to decline 37% to Rmb51mln, bringing 9 months to
Mar13 profit down 57% to Rmb69mln, prospects are
looking better with the company expecting their raw
material costs to moderate as they are able to source
their own raw materials rather than buy externally.
This should help improve margins going forward.

We suspect a replay of Guoco Group (HK$92.40,
up 10 cents) could be at work in Guoco Leisure (85
cents, up 1/2 cent) where the former had reported a
huge US$330mln loss in 1H2012 only to see Tan Sri
QLC launch in privatization offer in Dec12 at HK$88
per share and recently revised it up to HK$100 per
share, significantly above the pre-privatization price
of HK$60. Guoco Leisure had just reported a loss
for 3Q to Mar13 of US$6.5mln due to the eurozone
crisis. Technically, a break of the 78-80 cents level
suggests lower levels. It is currently trading at 0.77x
its NAV of $1.10 a share. We do not yet have a rating
on the stock. 

From UOB KH:
Singapore Airlines (SIA SP, C6L) –
Recovery in 4QFY13; Benign fuel outlook
Last price: S$11.39
Target Price: S$13.50
The recent decline in crude oil has lowered jet fuel prices and
we expect the trend to continue into the coming quarters. SIA,
trading at the lowest P/B among Asian carriers under our
coverage, should be the first to be re-rated. We expect SIA to
report better quarterly results (4QFY13), primarily due to lower
unit costs. While the market has been hopeful of a potential
special dividend following the divestment of Virgin Atlantic,
recent investments made into Tiger Airways and Virgin Australia
have exceeded the proceeds. We now value SIA, excluding SIA
Engineering, at 0.9x FY14F book value, and consequently raised
our target price by 26% to S$13.50. We upgraded our call to
BUY on 3 May 13.
Technically, the stock could trend higher after being supported
near S$10.60/10.00. The stock could move towards S$13.20
after a potential breakout.

China Aviation Oil (CAO SP, G92) –
Optimisation bearing fruit
Last price: S$1.085
Target Price: S$1.30
We have upgraded CAO to BUY after it reported a better-than expected
set of results. We believe that the optimisation of the trading segment
and an increase in strategic acquisition is bearing fruit as shown by 
the 44% jump in gross profit. CAO’s business model gives it an advantage.
The company supplies jet fuel to China annually and makes a fixed spread
gross profit.
When trading opportunities arise, traders can also lock in
profits. This type of business model makes it unlikely to book an
operational loss. While we think contributions from its 30%-
owned subsidiary are likely to be lower in the near term, the
stock’s share price has also retraced 15% from the high. We
believe this is a good level for investors to accumulate and we
have raised our target price for the stock to S$1.30, based on a
blend of our dividend discount model and an 11x PE valuation.
We upgraded our recommendation to BUY on 3 May 13.
Technically, the stock appears to be supported near S$0.95 and
could increase its odds of a downtrend reversal as prices are
trading towards S$1.10/S$1.22.

Ezion Holdings (EZI SP, 5ME) –
1Q13 results ahead of expectations
Last price: S$2.29
Target Price: S$2.60
Ezion’s net profit more than doubled in 1Q13 due to a one-off
gain. Excluding this, results were still ahead of expectations and
we expect higher earnings in the remaining quarters of the year
as more liftboats and service rigs commence operation. Over
2013-15, we project operating profit to treble. Following its
recent breakthroughs in Indonesia, Malaysia and Vietnam, we
also expect Ezion to announce more new charter contracts this
year. Ytd, it has already won five. We have raised our earnings
forecasts and target price to S$2.60, which is pegged at 11x
2014F EPS. We maintain our BUY recommendation.
Technically, the stock appears to continue to trend up with price
well support near S$1.98/1.90. The technical price objective
could be at S$2.55.

Parkway Life REIT- Fundamentals intact although valuations starting to look rich.
Downgrade to HOLD.
(PREIT SP/HOLD/S$2.74/Target: S$2.70)
FY13F DPU Yld (%): 3.9
FY14F DPU Yld (%): 4.1
Results in line with expectations. Parkway Life REIT (PLife) reported 1Q13 distributable income of S$16.0m (+2.9% yoy, -1.8% qoq) or a DPU of 2.64 S cents (+2.9% yoy, -1.9% qoq). The DPU for 1Q13 is within expectations at 25.4% of our full-year
forecasts.
Acquisitions of nursing homes in Japan are likely to continue due to PLife’s strategic partnership with Japan nursing home operators, but remain opportunistic as competition intensifies due to rising liquidity spurred by monetary easing. For example
Shinsei Bank is establishing the first healthcare REIT in Japan, while Singapore’s Healthway Medical has established a ¥15b fund to invest in nursing homes in Japan.
We downgrade to HOLD with a higher target price of S$2.70 (from S$2.62). We use the dividend discount model (required rate of return: 5.9%, terminal growth: 2.0%) to value PLife. Entry price is at S$2.35.

From DBS:
DBSV Research is initiating coverage on Thai Beverage
with a BUY recommendation and target price of S$0.80,
offering 30% total return upside on regional F&B player in
the making. Thai Bev is a market leader in spirits, green
tea and established distribution network in Thailand. We
expect continued re-rating to global/regional peers
average. The potential inclusion in MSCI could be a
catalyst.

The F&N Board has proposed a cash distribution of
S$3.28/share (total of S$4.73bn) via a proposed capital
reduction exercise. This accounts for c.85% of APB sales
proceeds of S$5.59bn. The timing of this capital reduction
is not surprising given expectations that its controlling
shareholders would be looking at extracting cash to pare
down debt that was undertaken for the takeover. F&N’s
2Q13 results were flat but within expectations. We expect
a stronger 2H on overseas property recognition. We
expect limited downside on the share price backed by its
proposed S$3.28/share cash distribution, and stable
earnings with its S$3.3bn in unrecognized revenue from
presold development properties. Maintain HOLD, TP
revised to S$9.52 (Prev S$ 8.99).

Mapletree Greater China Commercial Trust’s Festival Walk
continues to show resilience in tenant trades. Our latest
checks with management showed that the property
continued to enjoy a 9% y-o-y growth in tenant sales
from Jan-Mar 13 (up from 6% y-o-y expansion in the
previous quarter). Over the next few quarters, we believe
organic growth would remain the strongest drivers. With
80% of FY14 lease expiries at Festival Walk already locked
in and one thirds of renewals at Gateway Plaza
already re-contracted, earnings visibility and sustainability
is strong. Maintain Buy, TP S$1.22 (Prev S$ 1.18). The
trust is offering yields of 4.7% in FY14 and 5.3% in FY15.

9M12 earnings of RM 136m (+17%) for Silverlake Axis
were in line. FY13F/14F/15F earnings raised
6%/14%/19% on the back of recent acquisition and new
project pipeline. Maintain BUY, TP raised to S$0.80 (Prev
S$ 0.58) offering 14% potential returns over the next one
year.

1Q13 results for Pan-United Corporation in line, driven by
volume increases in Building Materials segment and
higher utilisation at CXP port. We expect construction
activities to rise and earnings growth is set to accelerate in
FY14F. We are neutral to PAN whether it increases,
maintains or decreases its CXP stake. Maintain BUY with
S$1.16 TP.

Earnings for UOL declined y-o-y on lower residential
recognition, and accounted for 16% of our full year
forecast. We expect earnings to be back end loaded this
year, with 2 residential projects to receive TOP this year
(1in Q2, 1 in Q4) and the launch of the Bright Hill Dr and
St Patrick’s Garden sites in 3Q13. The group has launched
a delisting and exit offer for the remaining stake in Pan
Pacific Hotels Group (PPHG) at SS$2.55/share. The offer
price is 3% lower than the Dec 12 RNAV of S$2.64 and at
a 65.5% premium to its book NTA of S$1.54. The
privatisation of PPHG gives more operational flex and
potential for RNAV expansion. Maintain BUY, TP raised to
S$8.21 (Prev S$ 7.77).

3Q13 net profit of US$4.1m (-25% y-o-y, -14% q-o-q) for
Amtek came in 50% below our forecasts. Tooling sales
were robust but outlook is dragged by the uncertain end
demand. FY13/14F earnings cut by 19%/16% to reflect
lower margin and higher tax rate. Maintain Fully Valued,
TP lowered to S$0.45 (Prev S$ 0.46) following earnings
cut and a rollover to blended FY13/14F from FY13
previously.

Nam Cheong’s 1Q13 earnings were largely in line at
RM35.8m, up 8% y-o-y. Revenue was up 14% to
RM235m on the back of delivery of 5 vessels during the
quarter. Shipbuilding gross margin was slightly below
expectations at 17% in 1Q13, but within guided range.
The Group also announced significant contract wins
worth a total of US$110m – for 1 AHTS vessel sold to a
new Indonesian customer + 4 PSVs sold to an existing
customer. The Group remains well on track to sell and
deliver on its newbuild programme of 19 vessels in FY13
and 25 vessels in FY14, underpinning earnings growth
trajectory of >20% CAGR over FY12-14. Including buildto-
order vessels, orderbook is now at record levels of
RM1.7bn. Maintain BUY, estimates and TP under review
 with likely upward bias), pending discussions with
management and analyst briefing today. 

Cosco Corp has signed a contract with a Malaysian
shipowner to build a floatover launch barge worth over
US$23m. Delivery is slated for 4Q13 from its Zhoushan
yard. With this contract, Cosco's YTD win is lifted to
US$277m. Management guided US$2bn order win this
year with 90% coming from offshore projects. YTD wins
seem lagging, forming only 14% of company's target
new order (as well as our assumption). Maintain FULLY
VALUED, TP: S$0.75. 

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.