OCBC Report 3 Jan 14

Telco Sector – Pricier charges for excess data usage Summary: StarHub Ltd has also just revised up its charges for every GB of data consumed above the free bundle, after SingTel and M1 doubled their excess data charges in Sep and Dec last year. However, we note that these higher charges for excess data would only give a modest boost to mobile ARPUs, given that any increase in data usage will be mitigated by the structural drop in SMS and voice usage, and also lower roaming revenue. As such, we foresee pretty limited mobile revenue growth in 2014, likely around the low- to mid-single-digit region. Hence, we continue to maintain our NEUTRALrating on the sector as yields, while decent, are not sufficiently attractive around current levels (~4.5%). (Carey Wong) MORE REPORTS Ezion Holdings: Proposed acquisition of Teras Conquest 4 Pte Ltd Summary: Ezion Holdings announced last evening that it has entered into a conditional letter agreement for the purchase of the 100% stake in Teras Conquest 4 Pte Ltd for US$32.5m (~S$41.2m). Teras Conquest 4's sole asset is a Multi-Purpose Self Propelled Jack-up Rig (or Liftboat) with a six year chartering contract to Ezion which commenced in Feb 2012. Ezion believes that this acquisition would allow it to re-flag the Liftboat and place it in a better position for the subsequent renewal of the charter contract. The acquisition would be funded entirely by the issuance of 18.4m shares by Ezion at an issue price of S$2.2407, or a slight 0.9% discount to its last closing price prior to this announcement. The 18.4m shares to be issued forms only 1.5% of Ezion's enlarged share capital. On a proforma basis, this transaction would have raised Ezion's 9M13 EPS marginally by 2.0% to 12.98 US cents. We will provide more details after the analyst briefing. Maintain BUY and S$2.57 fair value estimate on Ezion for now. (Wong Teck Ching Andy)

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NEWS HEADLINES - US stocks kicked off 2014 with broad declines, as investors cashed in on strong year-end gains. - Robust capital investments in global exploration and production projects in 2014 should keep new orders buzzing for Singapore's offshore and marine sector this year, although rising costs and competition could crimp margins. - Soilbuild Construction Group's wholly owned subsidiary SoilBuild (Pte) Ltd has been awarded a S$26.8m contract by Soo Kee Jewellery Group to construct its corporate headquarters. - Aspial Corporation has unveiled its latest gem - 383 King Street in Melbourne, Australia - which it is acquiring from MWM Australia for A$41.5m (S$46.5m). - GSH chief executive Gilbert Ee announced that the company has made a RM510m (S$196.6m) cash investment in the Sutera Harbour Resorts project and put an undisclosed sum into two neighbouring land parcels.