OCBC Report 28 Nov 13

COSCO Corp: Time needed to scale offshore value chain 2013 is looking to be the weakest year in terms of earnings for COSCO Corp (Singapore). After recording net profit of S$139.7m and S$105.7m in FY11 and FY12, respectively, net profit for FY13 looks set to be below S$50m. Indeed, after five quarters of either little cost overruns or reversal of provisions made earlier, COSCO returned to making provisions on its construction contracts again, dousing hopes that it is gaining footing on the execution front. Looking ahead, we expect the operating environment for the group to remain difficult. Any credit tightening in China may also affect the ability of customers to meet their financial obligations. Maintain SELL with S$0.61 fair value estimate. (Low Pei Han)

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NEWS HEADLINES - Taxi operators Comfort, CityCab and SMRT will be allowed to expand their fleet in the first half of next year, after meeting the LTA’s taxi availability standards. - SembCorp Industries has announced that its wholly-owned subsidiary has issued S$200m 3.64% fixed rate notes due 2024. - Interra Resources has started drilling development well TMT-58. TMT-57 is producing 650 barrels of oil/day. - Global Invacom Group has acquired Raven Manufacturing Limited for a cash consideration of £1.98m (approximately US$3.18m). - Datapulse reported 1Q14 net profit of S$985k versus S$4.05m a year ago. - PNE Industries announced FY13 profit of S$3.76m versus S$5.6m a year ago. - Elektromotive has issued S$200k of convertible notes due in 2018.