Local Brokerages Stock Call 8 May 2013

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

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

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

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

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

From Phillip:

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

Recommendation: Accumulate

Previous Close: S$ 0.630

Fair Value: S$ 0.670

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

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

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

·Maintain Accumulate with unchanged target price at $0.67.

Overseas Union Enterprise Ltd – Results Update

Recommendation: Accumulate

Previous close: S$3.08

Fair value: S$3.24

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

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

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

·Maintain Accumulate with unchanged fair value of $3.24

ST Engineering Ltd – Results

Recommendation: Accumulate

Previous close: S$4.37

Fair value: S$4.50

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

Record high order book of S$13.0bn.

Positive full year guidance maintained.

 Maintain Accumulate with unchanged TP of S$4.50.

From DBS:

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

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

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

Local Brokerages Stock Call 7 May 2013

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

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

Yamada Green Resources Ltd (YGR SP, MC7) -
Technical BUY with +34.6% potential return
Last price: S$0.26
Resistance: S$0.35
Support: S$0.22
BUY with a target price of S$0.35 with stops placed below
S$0.22. The stock appears to close above its mid Bollinger
band and could break out of the Bollinger band squeeze after
having broken above its downward sloping resistance line. Its
Stochastics has formed a bullish crossover and its RSI
indicator has turned up above a reading of 40. Watch to see
if its MACD indicator could also form a bullish crossover as
well.

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

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

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

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


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

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

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

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

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

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

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

 

Local Brokerages Stock Call 6 May 2013

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

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

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

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

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

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

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

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

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

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

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

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

Local Brokerages Stock Call 3 May 2013

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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