OCBC Report 11 Oct 13

Lian Beng: 1QFY14 results marred by marketing expenses Lian Beng announced 1QFY14 PATMI of S$7.3m – down 30.9% YoY – mostly due to increased selling and marketing expenses incurred at development projects and the cessation of tenant leases at Hougang Plaza. Topline for 1QFY14 came in 44.2% higher YoY at S$163.5m; due to a shift in revenue mix with a heavier percentage contribution from the construction segment, overall gross margins continue to dip – falling from 14.1% in 1QFY13 to 12.2% in 1QFY14. We note that Lian Beng continues to enjoy a firm construction book of S$1.2b, which would buttress forward revenues to an extent, and also a strong balance sheet with S$200.7m in cash with a fairly benign net gearing of 25.2%. That said, we see increasing uncertainties in the domestic residential space from recent cooling measures which could result in headwinds for the group’s property development business going forward. Rated BUY with a fair value estimate of S$0.58. (Eli Lee) Keppel Corporation: Secures another Mexican order Keppel Corp’s offshore and marine arm has secured a contract from Central Panuco S.A. De C.V., a subsidiary of Mexico's Perforadora Central, to build a KFELS B Class jackup rig worth US$240m, including owner furnished equipment. Scheduled for delivery in 4Q 2015, the jackup rig is intended for operations in offshore Mexico, and is the 13th KFELS B Class jackup rig that has been ordered for the Mexican market since 2010. Recall that KEP just won a US$440m order to build two similar design rigs for Clearwater in early Oct. KEP was won a total of S$5.2b orders YTD, accounting for about 87% of our full year estimate. Maintain BUY with S$12.87 fair value estimate.(Low Pei Han)

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NEWS HEADLINES - US stocks soared on Thu, with the Dow notching its best one-day point gain since Dec 2011, after House Republican leaders proposed a temporary extension of the nation’s debt ceiling. - Shares of key executives of Blumont Group have come under forced selling as SGX maintains trading restrictions on the company's stock and those of two others for a fifth day today. - The recent volatility in its share price has caused gold miner LionGold Corp to call off talks over a potential offer for Minera IRL, a Latin American precious metals mining company. - CapitaLand's The Ascott has extended its footprint to Thailand's Eastern Seaboard economic region with a contract win to manage a 133-unit serviced residence in Sri Racha district, Chonburi province. - Centurion Corporation issued its inaugural S$100m 5.25% notes due 2016 yesterday. The offering was close to two times subscribed.