Local Brokerages Stock Call 22 May 2013

From OCBC:
Singapore REITs: The burgeoning market
In our latest assessment of the S-REITs sector, we continue to see familiar trends. REIT managers have generally maintained firm growth in their trusts’ rental income, on the back of contributions from past investments and improved operational performance. For 2013, we are maintaining our view that S-REITs are likely to continue to deliver firm performance. Nevertheless, the S-REIT index has been enjoying a good run-up, raking up 36.7% gain in 2012 and another 12.7% increase YTD. Given that the S-REITs are now trading at a 24% premium to book value on average, we feel that it is prudent to be selective on S-REITs. We continue to prefer S-REITs with good growth potential, strong financial position and compelling valuations. In this respect, we continue to pick CapitaCommercial Trust [BUY, S$1.80 FV], Fortune REIT [BUY, HK$8.64 FV] and Starhill Global REIT [BUY, S$1.05 FV] as our preferred BUYs. Reiterate our OVERWEIGHTview on the broader S-REITs sector.
 
Bumi Armada Berhad: A good start to FY13F
Bumi Armada Berhad’s 1Q revenue jumped 46% YoY to MYR489m and net profit to shareholders increased by 22% YoY to MYR110m. The results were roughly in-line with ours and the consensus’ estimates. Segment results were mixed. Although the FPSO, OSV and T&I segments had YoY increases in revenue, only FPSO and OSV showed segment profit improvements. The OFS segment reported no activity for 1Q13. The group also benefited from disposal gain of a subsidiary of MYR9.4m, write-back of doubtful debt of MYR2.0m and a net foreign exchange gain of MYR3.0m. We tweaked our models slightly to reflect 1Q13 results and roll forward our estimates to FY13/14. Accordingly, our fair value increases slightly to MYR3.56 (previously MYR3.74) on 21x PER. Maintain HOLD.

From UOB KH:
Regional Banking- Approval for DBS to acquire Bank Danamon but with conditions.
DBS Group Holdings (DBS SP/BUY/S$17.35/Target: S$20.80)
FY13F PE(x): 12.1
FY14F PE(x): 10.8
The need for reciprocity. Outgoing governor Darmin Nasution said during parliament yesterday that Bank Indonesia has given approval for DBS to acquire up to a 40% stake in Bank Danamon (BDMN). Bank Indonesia would allow DBS to acquire BDMN in its
entirety at a later stage if Singapore reciprocates by granting Indonesian banks more access. Bank Indonesia is said to have sought Qualified Full Bank (QFB) licences for Bank Mandiri, Bank Rakyat and Bank Negara Indonesia.
Management at DBS has stressed repeatedly that majority control is important to DBS for the purpose of branding and integration of IT systems. Deduction to core capital is also punitive under Basel III if DBS only manages to acquire an associate stake in
BDMN.
The acquisition dilutes earnings and ROE for two years and would turn accretive in the third year. The deal is positive over the longer term by increasing DBS’ exposure to high-growth emerging markets. We have not factored in the impact from the acquisition of BDMN in our current target price of S$20.80 given the prolonged delay. Maintain our BUY recommendation and existing target price till we get clarity on the final outcome.

Singapore Plantation: 1Q13 results wrap-up: Results skewed by the large inventory drawdown from 4Q12. First Resources continue to outperform peers on higher ASP.
Mixed set of results, with First Resource continuing to outperform its peers with its better-than-industry CPO ASP and drawdown of inventory while better-than-expected results for Golden Agri Resources (GGR) was mainly supported by better performance
from its Chinese operations and inventory drawdown. Indofood Agri’s (IFAR) and Kencana Agri’s (KAGR) results were mainly dragged by lower CPO ASP, rising cost of production and weak CPO production on less external crop purchases.
Maintain UNDERWEIGHT. As CPO price is expected to trade sideways, plantation stocks are unlikely to outperform. However, some Indonesian plantation companies are better positioned as their estates’ younger age profile translates into stronger production
growth which will be able to mitigate the weaker ASP. SELL Golden Agri-Resources (GGR SP/SELL/Target: S$0.55) and Genting Plantations (GENP MK/SELL/Target: RM6.80). BUY Wilmar International (WIL SP/BUY/Target: S$3.80, First Resources (FR
SP/BUY/Target: S$2.35) and Bumitama Agri (BAL SP/BUY/Target: S$1.12). 

From DBS:
Earnings growth for the Singapore market is at a tepid
2% in 2013 and PE has re-rated to a rolling 12-mth
forward 14.7x (+0.5SD), thus there leaves little room for
upside on earnings potential. We turn our focus to asset
plays. At 1.5x P/BV, valuation for the Singapore market is
not excessive, and lower than 2.3x for South-East Asia
peers. We look for value to be unlocked in selected
property stocks, where the sector is trading at a 27%
discount to RNAV. The low interest rate environment and
significantly compressed yields in the S-REIT sector will
drive asset monetisation. Top picks are UOL, CMA,
Keppel Land and Banyan Tree which have potential for
value unlocking through divestments or REITS. Wing Tai is
a value buy, trading at 36% discount to its RNAV and
we expect upcoming launches to underpin share price
performance.

We continue to hunt for stocks with dividend yield upside.
Top picks are FCOT, Cambridge Industrial, Mapletree
Greater China and Religare Health Trust, Sheng Siong and
Singapore Post. 

Oil and Gas stocks have lagged the STI since April,
triggered by the dip in oil prices and disappointing 1Q
Results, except for Ezion and Kreuz which sparkled amid a
lacklustre reporting season. With oil prices rebounding,
and jack up market tightening, we expect interest in the
sector to return. Our picks are Keppel Corp, Nam Cheong,
CSE Global and Ezion. 

 

Local Brokerages Stock Call 21 May 2013

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

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

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

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

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

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

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

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

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

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

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

 
 

Local Brokerages Stock Call 20 May 2013

From OCBC:
Tiger Airways: Roaring success in FY14?
Tiger Airways (TGR) reported a decent set of 4Q13 results to close out the year with a second consecutive quarter of core operating profit. This helped overturn 1H13 losses and TGR recorded a FY13 overall core operating profit of S$7.3m (FY12: -S$83.4m) and its net loss narrowed to S$45.4m from S$104.3m a year ago. In the coming quarters, we expect TGR SG to continue exhibiting strong growth prospects and carry the group forward. Passenger demand has remained healthy for the group and the planned capacity increases for FY14 will allow it to capitalise on this demand. Despite the risk of a drag from its associates, we remain hopeful for a positive core net profit performance for FY14. Maintain BUYrating on TGR with an unchanged fair value estimate of S$0.79. 

CWT Ltd: Growing the trading wing
CWT Ltd’s 1Q13 revenue jumped 39% YoY to S$1.5b, while net profit was flat at S$27m. 1Q results were in-line with ours and the street’s expectations. The surge in 1Q revenue was mainly driven by its newly established trading business (Commodity SCM) which resulted in higher volume, and the inception of a new product line. At the same time, the group incurred higher administrative expenses relating to the costs of establishing new operations. The group’s logistics operations were largely business-as-usual. Looking ahead, we expect operating leverage to kick in for the Commodity SCM business and the group to expand its logistics capacity with the developments of three large warehouses in Singapore. Maintain BUY with unchanged FV of S$2.08. 

From UOB KH:
Cordlife Group- Pushed To A Record High On Positive
Newsflow (CLGL SP/BUY/S$0.915/Target: S$0.87)
Maintain HOLD; raised target price to S$0.87. We raised our
earnings estimates by 30% to reflect the impact of the latest
acquisitions and updated our outlooks on the cord blood and
tissue banking businesses. 

Oil services - Bottom-up strategy for outperformance.
We continue to advocate a bottom-up strategy that favours
companies in an aggressive business expansion phase leading
to EPS improvement. These companies focus on
regional/global expansion to capitalise on rising oil & gas
spending or are expanding their footprints to increase market
shares. They are actively pursuing business growth for greater
earnings, instead of waiting for a global recovery in offshore
support vessel (OSV) charter rates. Corporate growth
strategies in this cycle (2009 onwards) differ from those in the
last cycle (2003-08), which was driven by OSV charter-rate
increases. Our top picks include Kreuz, Nam Cheong and
Swiber. 

Kreuz Holdings (KRZ SP, 5RK) –
New capacity to bridge 2014 growth gap
Last price: S$0.74
Target Price: S$0.68
Kreuz reported 1Q13 numbers, which were in line with our
expectation. Margins continued to improve, while the group also
reported its seventh consecutive quarter of positive operating
cash flow. Kreuz’s orderbook currently stands at US$200m,
which will be recognised over 12-18 months. Even just based on
this, we estimate that the group will be able to achieve 70-75%
of our full-year revenue forecast. Management plans to charter
in one additional third-party vessel on a 1+1 year contract,
which will add capacity and allow the group to bid for additional
contracts. Kreuz has an option with a Chinese shipyard for a
second deepwater subsea construction vessel, which will
probably be exercised in light of buoyant subsea activity. We
maintain BUY with an unchanged target price of S$0.68, pegged
to a 2014F PE of 6.5x. We see the potential to raise our target
price now that the share price has exceeded it.
Technically, the stock has been supported near S$0.57 and a
break above S$0.75 may see it test S$0.85.

Nam Cheong (NCL SP, N4E) –
Strong earnings visibility from a record net orderbook
Last price: S$0.275
Target Price: S$0.34
Nam Cheong’s reported 1Q13 profit was in line with our
forecast. A key positive was the sale of five vessels, bringing
net orderbook to a record RM1.3b. This provides strong
earnings visibility for the next three years. According to
management, there have also been more enquiries on built-toorder
vessels, which is a sign of an industry-wide uplift in
activity. Management disclosed more details about the
shipbuilding programme for 2014, which we view as a wellbalanced
mix of different vessel types. We maintain BUY and
target price of S$0.34, based on 9.7x 2014F PE.
Technically, the stock has been supported near S$0.24 and may
continue to rise towards S$0.32.

Swiber Holdings (SWIB SP, AK3) –
Trading at a deep discount to our RNAV
Last price: S$0.695
Target Price: S$0.86
Swiber’s 1Q13 results were above expectations due to higherthan-
expected turnover and associates’ contributions. Gross
margin fell due to a different revenue mix. Swiber has won only
about US$150m worth of contracts ytd. Management said
project tenders are taking longer to conclude because of their
large size but they are eyeing three with an estimated value of
US$300m each. These projects are likely to be awarded in
2013. Swiber’s extensive regional footprints yield economies of
scale. While its high gearing is a still concern, it should start
tapering off from 2014 onwards as Swiber’s capex programme
is at a tail-end. The share price of 58%-owned Kreuz has
appreciated more than 80% ytd and this has enhanced Swiber’s
value. We estimate Swiber now trades at a more than 30%
discount to our estimated RNAV. We maintain BUY and target
price of S$0.86, based on a 2014F PE of 6.2x.
Technically on the weekly chart, the stock has been supported
near S$0.59 and a break above S$0.75 may see it test S$0.90. 

Singapore Airlines- 4QFY13: Market has not factored in key positives.
(SIA SP/BUY/S$10.93/Target: S$13.30)
FY14F PE(x): 22.1
FY15F PE(x): 14.2
The 4.3% yield decline was mainly due to forex impact. Some 79% of the 4.3% decline in the yields was due to lower S$-yields, ie SIA was impacted by the yen and the euro which had declined 7% during the period. About 10-12% of the parent airline's
revenue came from Japan and 22% from Europe. This suggests that competitive pressures were less of an issue. Despite the adverse forex moves in 1Q13, pax yields actually improved mom in March. If the forex impact was excluded, yields would have
improved qoq.
No reason to be pessimistic on results. We are surprised by the market’s reaction to the results. The decline in yields was mainly due to unprecedented currency volatility, especially in the yen. The market should be focusing on the impact of inbound travels to
Japan and that SIA would now have hedged its yen exposure at better rates.
Maintain BUY with a lower target price of S$13.30 (from S$13.50), mainly factoring in a 7.3% change in SIAEC’s target price. At current level, SIA is being valued at 70% ex-SIAEC after adjusting for a 10% discount to fair value. We continue to value SIA on an SOTP basis and value the airline business at 0.9x FY14F book value. 

From DBS:
CSE Global’s 1Q13 net profit of S$12.7m (flat y-o-y) was
in line but new order win of S$95m (up 11% y-o-y) was
below our S$110m estimate. CSE has guided for core
profit to improve in FY13F. The revival of higher margin
offshore projects in North America is expected to drive
growth despite lower revenue. Our revised TP of S$0.97
implies potential returns of 22%. CSE has a resilient
business model supporting a 40% payout ratio (4.9% to
5.5% yield).

Sheng Siong Group expects more earnings upside from
better operating costs and efficiencies. We have raised
earnings by 5.0%/3.5%. The recent price weakness
presents opportunities to accumulate. Upgrade to BUY
with higher TP of S$0.76 (Prev S$ 0.72).
We expect a maiden distribution of 8% annualised payout
(DPU of 3.56 Scts) in FY13 results announcement for
Religare Health Trust (RHT) on 21 May. Share price
appreciation is panning out as expected, and still has
8.3% yield and upside to revised TP. The recent drop in
Indian bond yields and stable INR is positive for RHT.
Maintain BUY, TP raised to S$1.06 (Prev S$ 0.97).

Operating profit of S$12.7m for Tiger Airways was above
estimates but associate losses dragged net earnings. The
upcoming divestment of stake in Tiger Australia stake and
recent round of fund raising bolsters balance sheet to
support growth trajectory. Tiger Singapore/ Mandala
should benefit from expansion of Singapore-Indonesia
bilateral. Maintain BUY with TP adjusted to S$0.79 (Prev
S$ 0.95) as we lower FY14/15F earnings by 38%/ 28% to
factor in a slower ramp up in associates’ profitability as
well as possibility of losses continuing at Tiger Australia,
albeit narrower.

Core earnings for Singapore Airlines were below
expectations due to an operating loss of S$44m in 4Q.
Net profit of S$379m was 13% higher than last year.
Passenger yields are likely to remain fairly tepid with a bias
towards modest improvements. However, jet fuel has
been trending lower and should help a modest recovery
for earnings. A S17cts final dividend was declared;
maintain HOLD, TP S$11.50 (Prev S$ 11.20).

Local Brokerages Stock Call 17 May 2013

From OCBC:
Singapore Airlines – Share gains premature
Singapore Airlines (SIA) reported a weak set of 4Q13 results as passenger yields remained depressed following weak demand for its services. Revenue fell 1.0% YoY to S$3.7b and operating loss widened to S$44.2m. On a full-year basis, revenue inched 1.6% higher but operating profit declined 19.8% to S$229.2m. Only with the gains from disposal of aircraft and parts did it manage to post an increase in PATMI for both the quarter (S$68.3m vs. –S$38.2m) and FY13 (S$378.9m vs. S$335.9m). Management declared a final dividend of 17 S cents, which brought the total dividends declared for FY13 to 23 cents (FY12: 20 cents). With the lacklustre results, continuing challenges ahead, and possible disappointment over the lack of a special dividend that some on the street had anticipated, we expect selling pressure on the counter, especially after it gained ~8% since mid-Apr. Based on a peg of 0.8x P/Book, we downgrade SIA to SELLwith a fair value estimate of S$10.00 (S$10.85 previously). 

KS Energy: Recovery will take time
KS Energy (KSE) reported a 27.6% YoY rise in revenue to S$153.4m and a net profit of S$1.1m in 1Q13, vs a net loss of S$315k in 1Q12. Though the group’s operating profit went into the red again after four previous quarters in the black, we understand that operating profit would have been about S$8.3m had it not been for a one-off foreign exchange loss from the Titan 2 disposal. We estimate core net profit of about S$0.4m in 1Q13. Overall, the group expects business and operating conditions this year to “remain similar” to 2012. We review the valuations of KSE’s closest comparables on the SGX, and note that the average P/Book valuation is about 0.7x. We ascribe a ~20% premium to arrive at a 0.85x P/Book for KSE due to its integrated operations which are larger in scale in comparison to some of its peers. As such, our fair value estimate falls to S$0.50, based on 0.85x FY13/14F NTA. Maintain HOLD. 

From UOB KH:
Silverlake Axis - Key takeaways from management
meeting
Grows its recurrent earnings and ventures into insurance.
Potential huge contract from a top-five Malaysian bank.
Maintain BUY; raise target price to street-high of S$0.94.

Far East Orchard (FEOR SP, O10) -
Technical BUY with +17.1% potential return
Last price: S$2.22
Resistance: S$2.60
Support: S$2.05
BUY with a target price of S$2.60 with tight stops placed
below S$2.12. The stock has closed above its rising 50-day
moving average and above its mid Bollinger band. Its bullish
momentum is likely to continue as its MACD and Stochastics
indicators look poised to form a bullish crossover and its RSI
indicator has rebounded above a reading of 40. Watch to see
if the stock could break above its recent high and its upper
Bollinger band.

DMX Technologies Group Ltd (DMX SP, 5CH) -
Technical BUY with +31.2% potential return
Last price: S$0.240
Resistance: S$0.315
Support: S$0.20
BUY with a target price of S$0.315 with tight stops placed
below S$0.21. The stock is trading above its 200-day simple
moving average and the golden cross formed earlier has yet
to be negated. Its Stochastics indicator has formed a bullish
crossover in the oversold region and its RSI indicator has
turned up above a reading of 40. Watch to see if prices could
break above S$0.27 as its 50-day simple moving average
could hook up instead.

Parkway Life REIT (PREIT SP, C2PU) -
Technical SELL with +7.8% potential return
Last price: S$2.70
Resistance: S$2.82
Support: S$2.49
SELL with a target price of S$2.49 with tight stops placed
above S$2.80. The stock could be moving sideways as prices
have been resisted by its upper Bollinger band and have
closed below its mid Bollinger band. Its MACD has formed a
bearish crossover and has hooked down, and its minus
directional indicator looks poised to cross above its plus
directional indicator. Watch to see if the stock could continue
to be supported by its rising 75-day moving average.
Our institutional research has a fundamental HOLD with a
target price of S$2.70.

From Maybank KE:
Singapore Airlines: Weak End To The Year; Upgrade to Hold, TP $11.70
SIA SP | Mkt Cap USD10.7b | ADTV USD7.3m
We upgrade SIA to Hold (from Sell) as we see limited downside with its
valuations near recession levels. Furthermore, the stock is well supported
by its net cash position of c.SGD3.7/shr.
SIA reported slightly disappointing earnings of SGD68mn in the quarter,
which was flattered by the SGD54.7mn gain on disposal of ppe.
We  expect  weakness  in the passenger yield to continue into the next
quarter  on  seasonal  factors.  However, further downside to cargo yields
should be limited by the ongoing measures to rein in capacity.
We lift our Target Price to SGD11.70, pegged to 1.0X FY14E BVPS. 

From DBS:

Tat Hong has entered into a non-binding heads of
agreement with Intraco and Mr Aung Moe Kyaw to
establish a JV in Singapore to carry out crane rental and
distribution to Myanmar. The shareholding of the
Singapore JV will be 40%/40%/20% for Tat
Hong/Intraco/Mr Aung with expected initial paid up
capital of US$3m. No impact on our call since the
development is very preliminary. We currently have a BUY
recommendation with TP of S$1.80.

Local Brokerages Stock Call 16 May 2013

From OCBC:
SingTel: Upside fairly limited; downgrade to HOLD

Summary: SingTel saw its 4QFY13 revenue slipping 6% YoY and 3% QoQ to S$4.48b, weighed down by the weaker A$. Full-year revenue fell 3% to S$18.18b, and was 3% shy of our forecast. 4Q core earnings slipped 2% YoY and rose 15% QoQ to S$1.0b. Core FY13 earnings eased 1.8% to S$3.61b, or about 4% below our forecast. SingTel has declared a final dividend of S$0.10/share, bringing the full-year payout to S$0.168 (74% of underlying net profit). Going forward, SingTel expects group consolidated revenue to remain stable, and EBITDA to see low single-digit growth. It has guided for S$2.5b capex spending and a FCF of S$2b; it also raised its dividend payout ratio to 60-75% (from 55-70% previously). While we raise our SOTP fair value from S$3.68 to S$3.83 (after updating the value of its listed associates), further upside from here looks limited after the recent sharp run-up. Hence we downgrade our call from Buy to HOLD.

Petra Foods – 1Q13 results below expectations
Summary: Petra Foods’ 1Q13 results fell short of expectations as growth slowed relative to the previous quarters. Revenue grew 7.7% YoY to US$127.4m while margin improvement boosted gross and operating profit. Excluding losses from its to-be-divested Cocoa Ingredients business, which resulted in an overall net loss for Petra, core PATMI came in at US$14.1m (+20.0% YoY but -4.3% QoQ). Based on the results, we reduce our FY13 projections to reflect more achievable revenue growth targets and to account for a net loss in 2Q13 from sustained losses in the Cocoa Ingredients business. In terms of valuations, Petra is currently trading at more than 36x FY13F / 32x FY14F PE. In our view, this premium is too expensive at this juncture, and we expect some profit-taking on the likelihood of overall losses for 1H13. Maintain HOLD with an unchanged fair value of S$3.88.

Olam Int’l: HOLD – recalibration still needs time
Summary: Olam International Limited (Olam) saw 3QFY13 revenue climb 12% YoY (but decline 4% QoQ) to S$4.72b, such that its 9MFY13 revenue of S$14.31b (+20%) met 72% of our FY13 forecast. Reported net profit gained 10% YoY (but fell 30% QoQ) to S$108.5m, while core earnings (excluding bio-asset revaluation gains etc) rose 13% YoY (down 22% QoQ) to S$92.8m. Core 9MFY13 earnings of S$240.3m met about 79% of full-year forecast. Meanwhile, net gearing remains high at 2.2x as at end-Mar, unchanged from end-Dec; this after it further increased borrowings to S$9.3b from S$8.8b. But Olam intends to reduce its gearing boundary condition from < 2.5x to < 2.0x. Still, we could continue to see some overhang from its high net gearing. We also opt to keep our FY13 estimates unchanged. But our fair value improves from S$1.50 to S$1.73 as we push our valuations out from blended FY13/14F EPS to FY14F EPS. Maintain HOLD.

Midas Holdings: Adverse near-term conditions
Summary: Midas Holdings’ 1Q13 net loss attributable to shareholders of CNY4.9m (1Q12: PATMI of CNY15.3m) was larger than our forecast for a net loss of CNY3.2m. This was attributed largely to a wider-than-estimated share of loss of CNY4.0m from its associated company, NPRT. Looking ahead, we believe that strength of Midas’ recovery will depend heavily on the resumption of new high-speed railway (HSR) tenders. As the timeline of this is still uncertain, we believe that a more significant recovery in Midas’ financial performance would likely come in FY14, versus our previous FY13 expectations. Paring our FY13 revenue and PATMI estimates by 9.7% and 59.1%, respectively, and lowering our valuation peg from 1.2x to 1.1x FY13F P/B, we derive a fair value estimate of S$0.54 (previously S$0.595). But we maintain our BUY rating as we expect the eventual HSR tenders resumption and subsequent contract wins by Midas to provide a re-rating catalyst for the stock. 

SIA Engineering: FY13 within expectations
Summary: SIA Engineering Company's (SIAEC) FY13 results were in line with ours and the street's expectations. Revenue decreased 2.0% to S$1.15b, chiefly due to lower fleet management and project revenue. Operating profit fell 1.2% to S$128m. Share of profits from associated and JV companies increased 1.5% to S$159m, representing a contribution of 52.0% of the group's pre-tax profits. PATMI was up 0.4% to S$270m. Basic EPS of 24.51 S cents formed 98% of ours and the street's FY13 estimates. The board is recommending a final ordinary dividend of 15.0 S cents, which will bring total FY13 dividends to 22.0 S cents per share. Increasing our P/E peg from 17.1x to 20.0x and using an EPS forecast of 25.0 S cents for FY14F, we increase our fair value from S$4.38 to S$5.00 and maintain our HOLD rating on SIAEC.

CSE Global: Focus on margin stability
Summary: CSE Global reported 1Q13 results that were in-line with ours and the street’s estimates. 1Q revenue fell 10.9% YoY to S$120m on lower contribution from the Americas and EMEA (Europe, Middle East & Africa), while PATMI was flat at S$12.7m. After encountering issues in the Middle East in 2011 (cost overrun at two large telco projects) and the Americas in 2012 (lower-than-expected margins for onshore work), CSE Global now appears to be more keen on the higher margin brownfield projects, while carefully re-evaluating the lower-margin greenfield jobs. We now expect a slight contraction or modest growth in the top-line across FY13-14F and gross margins to stabilize around 30%. We have tweaked our model slightly and our FV declines to S$0.96 (previously S$0.99) on 10x FY13F PER. Maintain BUY. 

Ezion Holdings: Bond issue to fund new contract
Summary: Ezion Holdings (Ezion) announced that it has received a letter of intent with a contract value of about US$80.3m over a four-year period to provide a service rig for an Asian-based national oil company. The unit is expected to be deployed and working in SE Asian waters by end-2013 after refurbishment and conversion. Unlike previous projects, this project will be funded through a bond issue; the total project cost is US$60m (US$40m asset cost, US$20m refurbishment, conversion). Indeed, we understand that Ezion has launched S$110m of six-year bonds at 4.70%. We maintain our BUY rating on the stock but put our fair value estimate of S$2.50 under review. 

KS Energy: Recovery will take time
Summary: KS Energy (KSE) reported a 27.6% YoY rise in revenue to S$153.4m and a net profit of S$1.1m in 1Q13, vs a net loss of S$315k in 1Q12. However, the group’s operating profit went into the red again, after four previous quarters in the black. Though revenue and net profit accounted for about 24% and 26% of our full year estimates, respectively, we note that results were bumped up by gains arising from the sale of a jointly owned asset. Gross profit margin was lower at 23.3%, compared to 28.2% in 1Q12. Revenue from the distribution business grew 40.6% YoY to S$120.4m, mainly due to strong project related sales in SSH Corp and Aqua Terra. The drilling business, on the other hand, saw a 9.6% growth in revenue. Pending further details from management, we put our HOLD rating and fair value estimate of S$0.70 under review.

From UOB KH:

Ying Li International Real Estate- Results within
expectations; new strategy to be unveiled soon (YINGLI
SP/BUY/S$0.495/Target: S$0.64)
Maintain BUY but with a reduced target price of S$0.64, pegged
at a 23.5% discount to our RNAV of S$0.83/share. This is in
line with the average discount for Chinese developers under our
coverage.

Global Logistic Properties (GLP SP, MC0) -
Technical BUY with +11.1% potential return
Last price: S$2.88
Resistance: S$3.20
Support: S$2.67
Maintain BUY with a revised target price of S$3.20 with tight
stops placed below S$2.78. The stock is currently trending
above its rising 30-day moving average and could continue
its bullish momentum. Its MACD did not form a bearish
crossover in the last trading session and the RSI indicator has
turned up above a reading of 60. Watch to see if the stock
could continue to make new 52-week highs.

Neptune Orient Lines (NOL SP, N03) -
Technical BUY with +12.7% potential return
Last price: S$1.10
Resistance: S$1.24
Support: S$1.05
BUY with a target price of S$1.10 with tight stops placed
below S$1.075/1.05. The stock is trading near a potential
triple bottom created on 25 Jul 12, 25 Sep 12 and 21 Nov 12
and prices have moved away from its lower Bollinger band
with comparatively higher trading volume. Its MACD has
formed a bullish crossover earlier and is trending up, while its
Stochastics appears to be forming another bullish crossover.
Watch to see if the stock could break above its declining 200-
day moving average.

Cordlife Group (CLGL SP, P8A) -
Take profit from previous technical BUY
Last price: S$0.88
Resistance: S$0.92
Support: S$0.77
The stock was featured as a technical BUY when it opened at
S$0.555 on 17 Jan 13. Prices did not fall below the stop-loss
level of S$0.535 and have since returned 58.5% on closing
prices, with an intraday high of S$0.89 in the last trading
session which exceeded the initial target of S$0.64. Some
profits could be taken off the table should the stock fail to
move above S$0.92. Its 21-day Stochastics is suggesting
that the stock is overbought.
Our institutional research has a fundamental HOLD with a
target price of S$0.65.

Olam International- 3QFY13: Results are within expectation. 4QFY13 numbers likely to be weaker on lower sales volume and net contribution/mt.
(OLAM SP/BUY/S$1.81/Target: S$2.00)
FY13F PE(x): 16.7
FY14F PE(x): 12.9
Within expectation. Olam reported a net profit of S$113.5m (+15% yoy, -26% qoq) for 3QFY13 and S$311m (+19% yoy) in 9MFY13. Profit was lower on a qoq basis due mainly to non-operating items. At EBITDA level, 3QFY13 was relatively flat as lower
qoq sales volume was compensated by better net contribution/mt. 9MFY13 strong profit growth was partly due to the gain from sales of US almond orchard, gain on bond buyback, losses from termination of sugar projects and net of tax pertaining to the sale
of almond orchard land.
Maintain BUY with a new target price of S$2.00 (previous: S$1.98) pegging FY14F EPS to 30% discount to Olam’s long-term forward PE of 16.1x (or equivalent to 1SD below long-term mean PE).

SATS- 4QFY13: Admirable 13.8% rise in core net profit.
(SATS SP/HOLD/S$3.22/Target: S$3.40)
FY14F PE(x): 17.5
FY15F PE(x): 16.8
Lower depreciation costs, a recovery from TFK and higher associate income lift core profit 32.4%. Headline 4QFY13 net profits declined 7.8% yoy due to a S$16.8m impairment charge relating to a deferred consideration arising from the sale of Daniels
Group two years ago. However, the 13.8% core net profit growth was admirable. Final dividend of 10 S cents (4 S cents special) amounted to a total payout of 90%.
Maintain HOLD but we raise target price from S$3.20 to S$3.40. We continue to value SATS based on a dividend discount model (required return: 7.1%, terminal growth 1.5%). At our fair value, the stock will offer a dividend yield of 4.7%.

SIA Engineering- 4QFY13: Two consecutive quarters of top-line decline. No immediate catalyst. Downgrade to HOLD.
(SIE SP/HOLD/S$5.06/Target: S$5.20)
FY13F PE(x): 19.9
FY14F PE(x): 18.9
Results slightly weaker than expected. Net profit came in 2.5% below consensus and 3.6% below ours. Revenue declined yoy but a slight improvement in operating margin and better associate income led to flat net profit. There was no change in its final dividend of 15 cents. Payout ratio increased from 86% to 90%. Operating cash flow was flat yoy but free cash flow (FCF) rose 5% yoy.
Downgrade to HOLD. We lower our target price by 7.2% to S$5.20 after lowering our FY14 and FY15 earnings estimates. We continue to value SIAEC on a DDM basis (COE 6.2%, terminal growth 1%). At our target price, the stock offers a dividend yield of 4.4%. Entry price is S$4.70.

S’pore Telecommunications- 4QFY13: Earnings decline on a yoy basis. Maintain SELL.  (ST SP/SELL/S$3.99/Target: S$3.54)
FY14F PE(x): 17.9
FY15F PE(x): 16.5
Singapore Telecommunications (SingTel) reported a net profit of S$868m (-32.6% yoy) for 4QFY13, below our expectation of S$913m. It completed the divestment of its 30% stake in Warid Pakistan, resulting in an exceptional loss of S$225m. Underlying net profit would have declined 2.2% yoy if we exclude all exceptional items.
Maintain SELL. Our valuation for SingTel is S$3.54 based on sum-of the- parts (SOTP) methodology. We have fine-tuned our SOTP valuation to utilise our target prices of Bt272 for AIS and Rp13,050 for Telkom, which are under our coverage.

Swiber Holdings- 1Q13: Trading at a deep discount to our RNAV.
(SWIB SP/BUY/S$0.69/Target: S$0.86)
FY13F PE(x): 5.8
FY14F PE(x): 4.8
Ahead of expectations. Swiber reported a net profit of US$20.1m (+132% yoy) for 1Q13. This was 36% of our 2013 forecast of US$56m. We attribute the higher-than-expected earnings to: a) faster-thanexpected orderbook recognition (1Q13 turnover was 27% of our 2013 forecast of US$1,137b), b) strong associates' earnings contributions, and c) lower-than-expected tax and minority interests.
Maintain BUY and target price of S$0.86, based on 6.2x 2014F fully diluted EPS. We peg Swiber’s valuation at a 35% discount to the long term PE mean of 9.6x (since 2004) of the offshore support vessel (OSV) owner segment of the offshore & marine sector.
We believe as Swiber ramps up its earnings, it will gain investor confidence as a good play on rising regional offshore exploration and production spending.

From DBS:

Ezion has signed a LOI to provide time charter for a service
rig, worth US$80.3m over 4 years. The rig is expected to
be delivered to a national oil company in SEA by end of
2013. Capex will be funded solely by a 6-year bond
issuance at c.5%. FY14F earnings were lifted by 4%.
Maintain BUY with higher TP of S$2.52 (Prev S$ 2.47).

China Merchant Holdings announced that its deal to
acquire Jiurui Expressway in exchange for its New Zealand
property business as well as cash and new shares has
been called off, mainly due to the failure to obtain
approvals from the New Zealand authorities to transfer its
property business to the sellers of Jiurui Expressway. As
such, our fully diluted EPS forecasts for FY13 and FY14 are
lifted (as Jiurui E'way was not initially expected to be very
profitable and dilution now does not take place) by
10.4% and 12.5% respectively to S 9.2cts and S 10.5cts
but our TP is reduced (reflecting the long term value that
Jiurui E'way would have brought) to S$1.07 from S$1.12.
Maintain BUY.

SingTel’s 4Q13 underlying profit of S$1001m (-2% y-o-y)
was in line with consensus but slightly below ours. We
were surprised with higher payout ratio of 60-75% (from
55-70%). At 75% payout ratio, dividend yield would be
4.5% in FY14F. Guidance from management is for stable
FY14F EBIT (excluding associates), 5% below market
forecasts. Maintain HOLD with revised TP of S$3.80 (Prev
S$ 3.40), after revising our valuation for Telkomsel and
Globe in line with higher market prices. SingTel is trading
at +2 S.D. above historical mean of 13.3x.

FY13 results for SATS were within expectations. A final
and special DPS of 10 Scts was declared. This will bring
FY13 DPS to 15 Scts, equating to a payout of 90% and
dividend yield of 4.7%. Maintain HOLD with higher TP of
S$3.29 (Prev S$ 2.80). SATS has performed well and is
now trading at 17.2x on FY14F PE, +1 std dev above
historical mean, and presents limited upside to our TP.

Banyan Tree Holdings reported a strong set of 1Q13
results, with earnings rising 19% to S$14m. Outlook for
hotels and property sales continue on an upward
momentum. Forward bookings for hotels improving while
new property launches in Phuket are selling like hot
cakes. Given its asset heavy balance sheet, we believe that
setting up a REIT (probably from its Thailand properties,
coupled with properties from its Indochina and China
Funds) can result in the group crystalizing significant value
in its balance sheet. Maintain BUY and TP S$0.83.

3Q-FY13 core earnings for Jaya Holdings were below. The
usually weak season (monsoons in SE Asia) was
exacerbated by changes in cabotage laws in Indonesia,
which limited the ability of the group’s fleet to participate
in Indonesian tenders. Utilisation has since recovered and
outlook for charter rates for the group’s OSV fleet
remains generally upbeat. However, FY13/14F earnings
cut by 5/8% on weaker 3Q and some revenue deferment
due to delays in vessel completions. The recovery story for
Jaya is intact; maintain BUY with S$0.85 TP.

1Q13 earnings for Yongnam were slightly below but on
track to meet our full year expectations. We expect back
end loaded earnings as Thomson Line commences
construction in 2H13. Maintain HOLD, TP S$0.33 (Prev S$
0.25). Yongnam is bidding for two airport projects in
Myanmar (Yangon International Airport and the
Hanthawaddy International Airport).

From Maybank KE:
Yongnam Holdings: Positioning Ahead of Contract Wins; Buy TP $0.43
YNH SP | Mkt Cap USD334.9m | ADTV USD2.9m
Reiterate  BUY  ahead  of  2H13. Our TP of SGD0.43 is pegged to 10x
FY13F.
1Q13 results were largely within expectation. Revenue grew 22% yoy.
Profit  was flat yoy, but this was in comparison to exceptional margins
in the same quarter last year.
We  expect  margins  to pick up on execution of strutting orderbook
which  has  higher  margins  and the commencement of new contract wins.
Management  is  gunning  for  several  contracts  in  2H13  which  will
replenish orderbook substantially.
 
 Sino Grandness: Watch Out For The Next Step; Buy TP $1.60
 SFGI SP | Mkt Cap USD337.1m | ADTV USD2.3m
Maintain BUY and TP of SGD1.60. Sino Grandness’s 1QFY13 results were
within  market  expectation  but  we  expect  2Q  and  3Q results to be
stronger. BUY maintained.
Garden Fresh continued to drive the growth with revenue up 50% yoy.
It seems RMB250m net profit target for Garden Fresh is on track.
We  maintain  our  BUY call and target price for the time being but
watch  out  for  the  further  step towards the Garden Fresh IPO, which
could significantly re-rate the stock.
 
Swiber Holdings: Strong Start to the Year; Buy TP $0.84
SWIB SP | Mkt Cap USD338.1m | ADTV USD1.1m
Maintain  BUY with TP of SGD0.84. A very strong set of 1Q13 results
following a record year in FY12, supports our upbeat view on Swiber.
Ø  1Q13 PATMI of USD20.1m was above expectations and make up 43% of our
previous  FY13F  forecast.  Contract  win is our main concern now given
that its last announced contract win was in Feb-13.
Swiber  is tendering for close to USD2b of contracts. Contract wins
plus  execution  is critical for Swiber in order to benefit from better
utilisation of its vessels. This would support a positive re-rating for
the stock and relieve balance sheet concerns.
 
SingTel: The Heavy Lifting Begins; Sell TP $3.38
ST SP | Mkt Cap USD51.0b | ADTV USD59.6m
SingTel is a SELL with a target price of SGD3.38 as the easy “hype”
phase  is  over  now that the stock has gained 30% in a year. M1 is our
top pick among Singapore telcos.
Even as it prepares to pour in more billions into loss-making, very
long-term  investments  with  no  hope for positive short-term returns,
capex  is expected to rise 25% and free cashflow is expected to drop by
a  third,  it  is on the eve of having to spend even more money that is
beyond  its  current  guidance  - if it wins one of two Myanmar telecom
licences (deadline 27 June 2013).
FY13  underlying  net  profit  of SGD3,611m was within expectations
mainly  because  of  strong contributions from Telkomsel and Globe that
offset continued poor results from Bharti Airtel.
  
Olam International: Work In Progress; Sell $1.55
OLAM SP | Mkt Cap USD3.5b | ADTV USD11.0m
Maintain  SELL  with  TP of SGD1.55, pegged to 13x FY13F. with 3Q13
results  were  within  expectations,  though  higher  than  ours,  with
recurring net profit coming in at SGD121.5m.
This  is  healthy  yoy  growth,  but it is worth noting that it was
driven  mainly by the Food Staples & Packaged Foods segment, where Olam
was able to profit from exceptional margins for rice in Nigeria.
We  think  time  will  be  needed for any restoration of its equity
premium.  Progress  will have to be made in the coming quarters for its
recent strategic review plans.
 
United Engineers: Hit by start-up expenses; Buy TP $4.05
UEM SP | Mkt Cap USD725.5m | ADTV USD0.9m
Maintain BUY with TP of SGD4.05/share, 25% discount to RNAV.
1Q13  results  were  slightly below our expectations, but largely a
misnomer  given UE’s ongoing plans to takeover WBL. With the recent WBL
saga  between  Straits  Trading  and UE drawing to a close, we think UE
will  experience  short  term  share price weakness via paying over 12%
higher than their original price for WBL
1Q  was  hit  by  higher staff and operating costs arising from the
commencement  of  UE Bizhub East and Park Avenue Changi. Revenue was at
SGD136.6m  (17%  YoY,  -25%  QoQ), and net profit at SGD7.4m (-24% YoY,
  -82% QoQ).
 
Midas Holdings: On The Way To Recovery; Buy TP $0.75
MIDAS SP | Mkt Cap USD464.3m | ADTV USD3.3m
Maintain  BUY and TP of SGD0.75. Midas reported a net loss of RMB5m
for  1QFY13.  But our investment theme for Midas remains to be a bet on
improving order flow in 2013 and a turnaround in earnings in 2014.
Management’s contract outlook implies further RMB500-600m order win
for  the  rest of the year on the top of current RMB650m order book. We
are  also  optimistic  on  the likelihood of potential high speed train
tender this year.
We  recommend the investors to be patient for the new order wins as
the current 1x PB provides a floor for the share price. 

 

Local Brokerages Stock Call 15 May 2013

From OCBC:
Neptune Orient Lines – Looking at the positives
Summary: Neptune Orient Lines's (NOL) 1Q13 results disappointed with a larger-than-expected core operating loss. Nonetheless, the figures marked a vast improvement over the same period a year ago. Revenue stayed relatively flat at US$2.37b (-0.3% YoY) and core operating losses narrowed to -US$85.2m from -US$233m a year ago following the success of the cost cutting initiatives implemented last year. Entering 2Q13, NOL could experience further downward pressure on freight rates although we remain hopeful that a combination of positive macro-data, collective industry action and lower bunker fuel costs will push NOL towards a more positive showing by 3Q13. We maintain our view for a modest recovery in FY13 for the liner and keep our BUYrating with an unchanged fair value estimate of S$1.38. 

SingTel: FY13 results just about in line

Summary: SingTel posted its 4QFY13 results this morning, with revenue slipping 6% YoY and 3% QoQ to S$4.48b, weighed down by the weaker A$. Full-year revenue fell 3% to S$18.18b, and was 3% shy of our forecast. Reported net profit for 4Q came in at S$868.2m, down 33% YoY but up 5% QoQ; core earnings slipped 2% YoY and rose 15% QoQ to S$1.0b. Core FY13 earnings eased 1.8% to S$3.61b, and was about 4% below our forecast. SingTel has declared a final dividend of S$0.10/share, bringing the full-year payout to S$0.168 (74% of underlying net profit). For FY14, SingTel expects to consolidated revenue to remain stable, while EBITDA should continue to see low single-digit growth. It also expects to spend some S$2.5b in capex, with free cashflow coming in at around S$2b. Last but not least, it has revised up its dividend payout ratio from 55-70% to 60-75%. We will have more after the analyst teleconference later. Meanwhile, we place our Buy rating and S$3.68 fair value under review. 

 

Olam Int’l: Decent 3QFY13 results
Summary: Olam International Limited (Olam) saw 3QFY13 revenue climb 12% YoY (but down 4% QoQ) to S$4.72b, such that its 9MFY13 revenue of S$14.31b (+20%) met 72% of our FY13 forecast. Reported net profit gained 10% YoY (but fell 30% QoQ) to S$108.5m, while core earnings (excluding bio-asset revaluation gains etc) rose 13% YoY (down 22% QoQ) to S$92.8m. Core 9MFY13 earnings of S$240.3m met about 79% of full-year forecast. We will have more after the analyst briefing later. Until then, our Hold rating and S$1.50 fair value is under review.

Noble Group Ltd: Weak FY13 start but recovery expected
Summary: Noble Group (Noble) reported a 1.1% YoY QoQ decline in revenue to US$22.6b, meeting 22.5% of our full-year forecast, but reported net profit tumbled 62.5% to US$41.3m, or about only 10.2% of our original FY13 forecast, weighed by losses at its Agriculture segment. Its Metals, Minerals and Ores (MMO) also did not fare too well. The only bright spark came from its Energy segment, with operating income up 6% at US$368.0m, although tonnage (Excluding gas and power volume) was flat. Noble intends to continue with its asset light strategy and also intends to focus on improving its efficiency and lowering cost amid a still-challenging environment. Still, we are cutting our FY13F earnings by 10% (FY14F by 13%), which in turn eases our fair value from S$1.19 to S$1.09. Maintain HOLD. 

ComfortDelGro - Decent start to the year
Summary: ComfortDelGro’s 1Q13 results saw revenue increasing slightly by 1.8% YoY to S$870.8m on the back of broad–based growth across its segments while operating profit improved 2.8% to S$95.9m as higher staff and repairs and maintenance expenses were offset by a reduction in fuel and electricity expenditure. As a result, PATMI rose 7.9% to S$57.7m. In the coming quarters, we expect a fare increase to be implemented by the government in FY13, and the group should to continue benefiting from lower fuel costs due to the favourable fuel outlook and proactive hedges in place, which should offset sustained weakness in the SG bus business. While we continue to prefer ComfortDelgro over SMRT, we maintain our HOLD rating with an unchanged fair value estimate of S$1.95 in light of its recent ~8% appreciation. 

Midas Holdings: 1Q13 net loss wider than expected
Summary: In line with its profit guidance issued on 10 May, Midas Holdings reported a net loss attributable to shareholders of CNY4.9m in 1Q13, versus PATMI of CNY15.3m in 1Q12. Revenue fell 12.1% YoY to CNY202.4m. While we had expected Midas to report a loss-making quarter, the magnitude was larger than our forecast for a net loss of CNY3.2m. However, revenue was within our CNY199.8m estimate. The below-expectations bottomline performance was due partially to weaker-than-estimated gross margin and largely attributed to a wider share of loss of CNY4.0m from its associated company, Nanjing SR Puzhen Rail Transport (OIR forecast: share of loss of CNY0.8m). On an operational basis, Midas was actually profitable, although profit from operations dipped 50.4% YoY to CNY18.9m. We will provide more updates after the analyst conference call. For now we have a BUY rating on Midas. However, our forecasts, 1.2x P/B target peg and S$0.595 fair value estimate are likely to be lowered given the ongoing uncertainty over the timeline of resumption of new high-speed train car orders. 

 
SATS Ltd – FY13 results in-line
Summary: SATS’s FY13 results were in line with our expectations, coming in within 2% of our projections. Revenue grew 7.9% YoY to S$1,819m on the back of increases from the gateway and food businesses while operating profit increased correspondingly by 13.8% YoY to S$192.3m. Despite cost pressures related to higher staff expenses and raw material costs, SATS was able to register an improvement of 0.6ppt in operating margin to 10.6% from a year ago. FY13 PATMI was S$184.8m (+2.1% YoY). Management declared a final and special cash dividend of 6 S cents and 4 S cents, respectively, to bring the total dividends declared in FY13 to 15 S cents (FY12 total: 26 S cents), representing a payout ratio of 90.3% of PATMI. As SATS’s share price has continued to appreciate in the previous weeks, we feel that many of the positives have already been priced in. Nonetheless, pending the analyst briefing later this morning, we place our HOLD rating and fair value under review. 

 
SIA Engineering: FY13 within expectations
Summary: SIA Engineering Company's (SIAEC) FY13 results were in line with ours and the street's expectations. Revenue decreased by 2.0% to S$1.15b, chiefly due to lower fleet management and project revenue. Operating profit fell 1.2% to S$128m. Share of profits from associated and JV companies increased by 1.5% to S$159m, representing a contribution of 52.0% of the group's pre-tax profits. PATMI was up 0.4% to S$270m. Basic EPS of 24.51 S cents formed 98% of ours and the street's FY13 estimates. The board is recommending a final ordinary dividend of 15.0 S cents, which will bring total FY13 dividends to 22.0 S cents per share. Pending a briefing with management, we are maintaining our HOLD rating but place our fair value estimate of S$4.38 under review.

Swiber Holdings: Good 1Q13 results
Summary: Swiber Holdings (Swiber) reported a 59.3% YoY rise in revenue to US$309.7m and a significant rise in net profit from US$8.6m in 1Q12 to US$20.1m in 1Q13. Both revenue and pre-tax profit formed 27% of our full-year estimates, in line with our expectations, but the lower-than-expected tax rate meant that net profit accounted for 38% of our full-year forecast. Gross profit margin was lower at 16.1% in 1Q13 vs 19.8% in 1Q12. Swiber’s order book stands at about US$1.1b as at May. Net gearing increased slightly from 0.95x in 4Q12 to 1.0x in 1Q13. Pending an analysts’ briefing later in the afternoon, we put our hold rating and fair value estimate of S$0.70 under review. 

CSE Global: 1Q13 net profit within expectations
Summary: CSE Global’s 1Q13 net profit was flat at S$12.7m, forming about 24% of our full-year estimates and 23% of the street’s. Revenue declined 11% to S$120m due to lower contribution from the Americas and the EMEA region. However, net margin improved to 10.5% (1Q12: 9.4%) as it undertook higher margin work in the Americas and the loss-making projects are nearing completion. CSE’s order-book declined to S$361.1m as at end-1Q13 (end-4Q12: 384.5m). Pending an analyst briefing later, we keep our BUYrating (FV: S$0.99) unchanged.

CWT Ltd: Commodity SCM expansion underway
Summary: CWT’s 1Q13 revenue increased by 39% YoY to S$1.5b, largely due to growth from its newly established Commodity SCM business. However, net profit was flat at S$27m as the start-up costs offset any incremental earnings for the new business segment. Nonetheless, the results were within our expectations. CWT’s balance sheet also appeared to be stable with net gearing of 0.48x as at end-Mar 2013. We currently have a BUYrating on CWT with a FV estimate of S$2.08, and will provide further updates after our call with management.

Dyna-Mac Holdings: Stay cautious
Summary: Dyna-Mac Holdings reported revenue of S$60m (+155% YoY) and net profit of S$6.7m (+101% YoY) for 1Q13. However, gross profit margin declined to 24.4% from 28.8% in the year-ago period due to fewer variation orders during the quarter. Its order-book fell to S$113m (as at 14 May 2013) from S$134m (as at 27 Feb 2013), providing cover for only two quarters. This makes it vulnerable to any delays in the award of new contracts. We keep our HOLD rating for now and will review our S$0.50 fair value after our discussions with management. 

 
UE E&C: Construction pace expected to pick up
Summary: UE E&C reported a 43% YoY increase in revenue to S$87.6m and a 14% YoY increase in net profit of S$4.8m in 1Q13. The improvements were mainly due to larger contribution from existing projects. However, 1Q gross profit margin fell to 10.8% from 15.4% in the year-ago quarter as some of the projects were still in preparatory stages. We expect the construction pace to pick up in 2H13. Pending our discussions with management, we keep our BUY rating and S$0.82 fair value unchanged. 

VARD Holdings: Earnings recovery in FY14
Summary: VARD Holdings’ 1Q revenue and net profit declined by 2% and 30% YoY to NOK2.7b and NOK188m respectively, largely due to (i) the completion of several high-margin jobs last year, and (ii) operational challenges in the Niteroi yard in Brazil. Although 1Q results were slightly lower than ours and consensus estimates, we now see positive developments that we believe would herald an earnings recovery in FY14F. Firstly, management is now more positive on Brazil and expects operations to stabilize by year-end. Secondly, order-book is at a very healthy level and management is optimistic on securing new contracts. Thirdly, management is now able to commit to longer-term investment with Fincantieri coming onboard as a controlling shareholder. Maintain BUY with unchanged S$1.52 fair value estimate. 

From UOB KH:

Hafary Holdings Limited- Triple Boosters For This
Undervalued Gem (HAFA SP/BU/S$0.25/ Target:
S$0.33)
Triple boosters. Since early April, Hafary Holdings (Hafary)
has enjoyed three strong catalysts including: a) a second
interim dividend of 1.5 S cents/share (post-split), b) a transfer
to SGX Mainboard from Catalist, and c) 2-for-1 share split.

ComfortDelGro Corporation- 1Q13: Stellar results highlight earnings resilience; upgrade to BUY.
(CD SP/BUY/S$2.06/Target: S$2.32)
FY13F PE(x): 16.9
FY14F PE(x): 16.0
Stellar results. ComfortDelGro Corporation (CD) reported a net profit of S$57.7m (+7.9 % yoy) for 1Q13, accounting for 23% of our full-year profit forecast. In 2012, 1Q profits contributed 21% of full-year earnings.
Upgrade to BUY with DCF-derived (cost of equity: 6.5% terminal growth: 2%) target price of S$2.32 (previously S$1.92). We have raised our target price based on our higher earnings estimate, and lowered our capex forecast to S$500m per year from
S$520m-550m previously.

First Resources- 1Q13: Net profit of US$62.6m (+29.9% yoy, +34.4% qoq), above
expectation. The most remarkable set of results among peers.
(FR SP/BUY/S$1.87/Target: S$2.35)
FY13F PE(x): 13.6
FY14F PE(x): 10.9
Results above expectation. First Resources (FR) reported an impressive set of results with net profit for 1Q13 up 29.9% yoy and 34.4% qoq to US$63.6m.
Maintain BUY and target price of S$2.35, based on 14x 2014F PE, at mid-cycle valuation. We like FR for its hands-on management team, young age profile and efficiency.

Neptune Orient Lines- 1Q13: Gain from sale of building leads to an expected turnaround.
(NOL SP/BUY/S$1.09/Target: S$1.40)
FY13F PE(x): 8.3
FY14F PE(x): 9.1
Neptune Orient Lines (NOL) reported revenue of US$2,371m (+4% yoy) in 1Q13. It turned around from a 1Q12 loss with a net
profit of US$76m, thanks to a US$203m gain from the disposal of NOL Building. The core losses were quite close to CSCL’s and in
line with our expectation.
Maintain BUY but cut our target price to S$1.40, based on 1.2x 2013F P/B. As a premium TP carrier with more than 95% exposure
to TP contractual cargo, NOL is a major beneficiary of the potential TP contractual rate hike. In addition, rates and valuations have
bottomed out simultaneously, creating buying opportunities.

Noble Group- 1Q13: Continued weak agriculture margins led to a 62% yoy fall in net profit to S$41m. We see
consensus earnings downgrades as a catalyst.
(NOBL SP/SELL/S$1.115/Target: S$0.92)
FY13F PE(x): 15.8
FY14F PE(x): 13.0
Disappointing 1Q13. Noble Group’s (Noble) 1Q13 net profit of US$41.3m was substantially below our and consensus forecasts.
Although group tonnage for the various segments was flat at 52.7m tonnes (-0.6% yoy), operating income from supply chain was dragged by a US$66.6m loss in its agriculture division. On a more positive note, the group executed well on its plans to manage
finance and sales, administration and operating expenses (SAO) by cutting these two costs by 13% yoy and 19% yoy respectively.
SELL; consensus downgrades coming. Maintain SELL with a lower target price of S$0.92 (previously S$1.17), based on a 30% discount to its long-term mean PE of 15.3x. 

From DBS:

Core loss of US$121m for Neptune Orient Lines exceeds
expectations. Rate increases is hard to push through as
liners fail to maintain capacity discipline. Recovery
timeframe is pushed back; normalized returns look
unlikely for NOL before FY15. We cut our earnings
estimates for FY13/14 by 107%/70%, in line with more
bearish volume and freight rate expectations hereon.
Downgrade to HOLD with lower TP of S$1.19 (Prev S$
1.45).

1Q13 results for Noble Group below as agriculture
segment swung into the red. This division was hammered
by idled Argentina soybean plants, logistic congestion in
Brazil and weak sugar prices. We expect sequential
improvement in the absence of one-off negatives but the
sugar business may continue to face challenges from low
sugar prices. We have cut our FY13/14F earnings by
12%/9%. Downgrade to HOLD with TP cut to S$1.00
(Prev S$ 1.45). We believe Noble’s share price will come
under pressure post the disappointing results, earnings
downgrades and slow macro recovery.

SingTel’s 4Q13 underlying profit of S$1,001m (-2.2%
yoy) was 5% below ours and consensus estimate of
S$1,050m due to weak Singapore and regional
associates. Singapore’s underlying profit declined 5% yoy
to S$282m due to S$41m loss from new digital business
(versus S$13m loss in 3Q13). Associate’s underlying
profit contribution of S$387m was up 5% yoy but below
our expectations of S$420m due to currency translation
losses as Indian Rupee and Indonesia Rupiah declined
11% and 9% yoy respectively. Telkomosel, AIS and Globe
offset Bharti’s weakness. Management guided for stable
group revenue with low-single digit growth in EBITDA led
by cost cutting. However, it guided for stable EBIT
(excluding associates) due to higher depreciation and
amortisation. We will be reviewing our estimates and TP
but are likely to maintain HOLD call.

1Q13 results for ComfortDelgro within expectations. Net
profit up 7.9% y-o-y; EBIT margins expand on lower
fuel/energy costs. We expect re-rating to continue given
its stable profile, predictable earnings stream, diversified
geographical exposure and strong balance sheet.
Maintain BUY, TP raised to S$2.19 (Prev S$ 2.05) as we
roll our valuations to FY14, from a blended FY13F/14F.

First Resources’ 1Q13 earnings of US$63.6m (+30%y-o-y;
-13% q-o-q) were ahead of expectations. Key difference:
implied CPO ASP booked was 35% higher than average
spot prices (net of export taxes). FY13F/14F/15F earnings
were tweaked by +4%/-4%/-3% on changes in CPO ASP,
FFB yields, and olein volume assumptions. BUY call
reiterated for 15% upside to S$2.14 (Prev S$ 2.16) TP.

Midas reported a small loss in 1Q of Rmb 4.9m vs. profit
of Rmb 15.2m last year due to lack of contract wins in the
last 18 months. We expect a turnaround in 2H13 as the
group’s order book has now grown to c. Rmb800m from
just Rmb400m in January. The magnitude of turnaround

for Midas would depend on the timing of the high speed
rail contracts. Maintain BUY with S$0.60 TP based on
1.2x P/BV.

FY13 results for SIA Engineering were slightly below
estimates on lower revenues from fleet management and
lack of special projects. We are scaling back FY14/15F
earnings by 2/3% to account for the slower growth
trajectory. Final DPS of 15Scts was declared, in line with
our estimates, and implies total payout of 22Scts for FY13
(FY12: 21Scts). There is little room for further
outperformance, maintain HOLD with a TP of S$4.80.

Thai Beverage’s 1Q13’s net profit fall was within
expectations. The net profit drop was impacted by net
loss from F&N’s operating results. Spirits volume is
recovering from higher inventory carried by trade; we
expect sequential improvement. Maintain BUY, TP:
S$0.80.

1Q13 core earnings for Vard saw a 25% sequential
improvement but EBITDA margins still at low levels – in
line. Outlook for subsea remains robust and there are also
signs of improvement seen for AHTS market. The
operating issues in Brazil should be largely resolved by
end-FY13; we expect EBITDA margins to improve next
year. Maintain BUY; TP revised down to S$1.46 (Prev S$
1.57) as we trim FY13/14F earnings by 4/6%.

1Q13 net profit of S$12.7m for CSE Global, up 4% yoy,
was inline and account for 23.1% of our full year
estimates. Revenue declined 11% yoy due to lower
onshore activity in North America and lower zero-margin
revenue in Middle East and project delays. However gross
margin improved to 31.5% versus 27.9% in 1Q12 due to
higher margin offshore projects and lower zero-margin
revenue. New order wins stood at S$95m, up 11% yoy,
below expectations and only account for 17.2% of our
full year estimate. We have a HOLD rating with TP of
S$0.85. More updates after discussion with the
management.

From Maybank KE:
Noble Group: Agri Problems Persist; Cut to Hold, TP $1.17
NOBL SP | Mkt Cap USD5.9b | ADTV USD18.3m
1Q13 results were significantly below market expectations, as problems
in  its  agricultural  segment  persist. Recurring net profit was down 55%
yoy, hurt by a maiden loss in its agri segment.
We had earlier been positive on its new asset-lighter strategy and the
 benefits  of that in terms of lower overhead cost and strong balance sheet
 remains  evident.  However,  poor  earnings level and visibility will be a
 near-term drag on stock price.
We  cut our earnings by 18-26%, and our new TP of SGD1.17 is pegged
to  13x  FY13F.  We  would recommend entry around SGD1.00, where 1x P/B
provides strong support.
  
First Resources: Boosted By High CPO ASP, Sales Volume; Buy, TP $2.06
FR SP | Mkt Cap USD2.3b | ADTV USD3.2m
FR’s  1Q13 core net profit of USD64m (+34% QoQ, +30% YoY) was ahead of
expectations, at 36% of our forecast and 31% of consensus. 1Q results were
lifted  by higher CPO ASP achieved on forward sales locked-in in 2012, and
the drawdown of inventories to boost sales volume.
1Q  is  a  disproportionate  36%  of our full year forecast but we are
 maintaining  our full year forecast as 1Q was boosted by factors that will
 not be repeated.
 Still,  we  like  FR  for  its  long-term value proposition, strong
 management,  and  low  production cost. Maintain BUY with TP of SGD2.06
 (+11% upside) on 13x FY14 PER.
 
Vard Holdings: Looking More Attractive; Buy, TP $1.65
VARD SP | Mkt Cap USD1.0b | ADTV USD7.1m
Recent   sell-down   is   unwarranted   and   we   believe   that
stronger-than-expected  order  intake  this  year  would drive positive
re-rating. Reiterate Buy, TP SGD1.65.
1Q13  net  profit  of  NOK188m  (-30% YoY, +52% QoQ) was within our
expectations  but  below  consensus.  We  point  out  that current year
earnings  is  a  repercussion  of  past  event  which  should have been
anticipated.
We  think that order win this year could surprise on the upside and
high  cost  issues  in  Brazil  yard should be resolved by end-2013. At
7.2x/5.6x FY13F/14F PER, valuation is undeservingly low.
 
Biosensors International: More Acquisitions On The Way; Hold, TP $1.28
BIG SP | Mkt Cap USD1.7b | ADTV USD3.1m
Biosensors  is acquiring the assets of Spectrum Dynamics (SD) for cash
consideration  of  USD51.13m  (7x  P/B).  This  marks  the  first  of more
acquisitions to come as Biosensors seeks to expand its product offerings.
Given  that  there  would not be any near-term contributions from this
acquisition,  we believe that the market reaction would be neutral. Growth
expectations  need  to  be  tempered  with  execution risks in the initial
stages.
We  have  not  accounted  for  any  potential  contributions in our
forecasts and valuations. Maintain Hold and SOTP-based TP of SGD1.28.
  
CWT: Growth Story Intact; Buy, TP $2.20
CWT SP | Mkt Cap USD872.8m | ADTV USD1.1m
1Q13 net profit was within expectation. Our expectation of a 30% profit
growth  for  the  full-year  remains  intact  and  we  continue  to  see a
multi-year structural growth story from here.
We estimate that volume in its commodity trading business grew by more
 than  20%,  which  is  encouraging.  We  expect  to see operating leverage
 kicking in as the year goes on.
We  keep estimates unchanged and adjust our SOTP TP to SGD2.20. The
acquisition  of  a  new  land  at  Pandan  Ave  will likely add between
SGD0.15-SGD0.20 to value per share.