OCBC Report 2 Jan 14

KEY IDEA TEE International: 1QFY14 miss likely a blip - upgrade to BUY Summary: After its 1QFY14 results miss in Oct-13, TEE’s share price has drifted steadily down to S$0.29 - near its 52-week low. We see significant value at these levels and upgrade the stock to a BUY with an unchanged FV estimate of S$0.35. Our investment thesis rests on three components: 1) 1QFY14’s results miss was likely a temporary blip due to one-time charges, and we continue to forecast FY14 PATMI to grow 27% YoY, with sequential earnings improvement to be seen from 2QFY14 onwards; 2) the fundamentals of the group’s businesses remain sound; management recently announced, in Dec-13, a significant S$142.2m contract win for the Marina South Mixed Development project which boosted TEE’s order book to a healthy S$317m; 3) we are forecasting for a 2.1 S-cent dividend in FY14, which translates to a fairly attractive 7.2% yield at current prices and could likely cap significant downside risk from here. (Eli Lee) MORE REPORTS Sembcorp Marine: Secures US$211.5m Jack-up Rig Order Summary: SembCorp Marine (SMM) has secured a repeat order to build a third Pacific Class jack-up rig worth US$211.5m from Perisai (L) Inc, a wholly-owned subsidiary of Perisai Petroleum Teknologi Bhd. Scheduled for delivery in 3Q16, the rig will be built based on PPL Shipyard’s proprietary Pacific Class 400 design with similar specifications as the first and second rig units secured in May 2012 and Feb 2013 respectively. We estimate that the latest order win would boost its net order book to S$13.76b, versus S$12.7b won in 2012; although the latest contract is not expected to have any material impact on the consolidated NTA and EPS for FY13. Maintain BUY with an unchanged S$5.68 fair value. (Carey Wong)

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NEWS HEADLINES - China’s official PMI came in at 51 for the month of Dec, a four-month low and was also below the median 51.2 estimate in a Bloomberg poll. - The US Conference Board index climbed to 78.1 in Dec, as compared to the revised figure of 72 in Nov, signalling stronger consumer confidence. - GSH Corporation and TYJ Group Pte Ltd – the investment vehicle of “popiah king” Sam Goi – are jointly investing ~MYR700m in the Sutera Harbour Group for a 77.5% stake. - ASL Marine announced that its 36%-owned PT. Capital Nusantara Indonesia has received regulatory approval to conduct an IPO on the Indonesian Stock Exchange. - Frasers Centrepoint Ltd’s CEO said in a Business Times interview that it is targeting a 50-50 split between its Singapore and foreign assets in five years’ time (foreign assets currently contribute 36% of its asset base).