Today’s Focus
Tat Hong – Poor earnings visibility, downgrade to FULLY
VALUED and cut target price to S$0.64
ComfortDelgro - Healthy balance sheet to pursue
growth; maintain BUY, target price S$2.19
Tat Hong’s 3Q FY14 earnings missed estimate on weak
Australian and Indonesian operations. We expect recovery in
Australia to be slow, and Tat Hong’s earnings visibility
remains poor. Our analyst has slashed FY14F/FY15F earnings
by 28%/42% to account for poorer earnings visibility, keener
competition and higher operating expenses. Downgrade to
FULLY VALUED; cut target price to S$0.64 (Prev S$ 1.01).
4Q13 results for ComfortDelgro in line. Dividend payout
inched up to 56.5% with 4 Scts final DPS declared (FY13:
7Scts vs FY12: 6.4 Scts). The Group has a healthy balance
sheet to pursue growth and/or raise dividend payouts. Either
option could be a share price catalyst. The management has a
medium term target of 60% overseas contribution. Maintain
BUY for its steady profile; target price S$2.19.
Results for CapitaMalls Asia in line, lifted by improved
operational performance. Going forward, more new
completions are expected to raise recurrent income. Maintain
BUY, TP raised to S$2.28 (Prev S$ 2.22). We continue to like
CMA’s Pan Asian consumption exposure through its retail real
estate sector.
Mermaid Maritime starts off FY14 with a solid set of results;
earnings beat expectations as subsea utilisation surges to
86%. Associate Asia Offshore Drilling (AOD) also generates
higher-than-expected profits. On the back of improving fleet
utilisation and day rates, improving subsea margins (operating
leverage), contribution from associate AOD and fleet
expansion initiatives, Mermaid is on track to deliver strong
earnings. Mermaid’s bottomline is expected to grow at an
impressive 61% CAGR over FY13-16. Maintain BUY with
target price of S$0.60.
OCBC reported a net profit after tax of S$715m for 4Q13,
8% higher than a year ago, driven by strong growth in
Malaysian and Indonesian banking operations. Excluding noncore
divestment gains of S$1.17 bn a year ago, core net
US Indices Last Close Pts Chg % Chg
Dow Jones 16,027.6 63.6 0.4
S&P 1,829.8 10.6 0.6
NASDAQ 4,240.7 39.4 0.9
Regional Indices
ST Index 3,039.9 4.5 0.1
ST Small Cap 524.6 (1.0) (0.2)
Hang Seng 22,165.5 (120.3) (0.5)
HSCEI 9,872.7 (124.1) (1.2)
HSCCI 4,276.5 (26.0) (0.6)
KLCI 1,817.2 (8.5) (0.5)
SET 1,311.9 (2.2) (0.2)
JCI 4,491.7 (4.6) (0.1)
PCOMP 6,101.7 (10.6) (0.2)
KOSPI 1,927.0 (8.9) (0.5)
TWSE 8,467.7 (43.2) (0.5)
Nikkei 14,534.7 (265.3) (1.8)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 557
Total Daily Vol (m shrs) 2,366
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
13 Feb
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.665 0.76
Keppel Corp Buy 10.390 12.60
ST Engineering Buy 3.800 4.90
Yangzijiang Buy 1.125 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
13 Feb
Target Price
($)
Ezion Holdings Buy 2.180 3.36
China Merchants Buy 0.880 1.20
Pacific Radiance Ltd Buy 0.965 1.05
Nam Cheong Buy 0.320 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
profit after tax for the full year of S$2.77bn was 2% lower,
as the strong customer-related business results throughout
the year were offset by lower net trading income and
unrealised mark-to-market losses from Great Eastern
Holding’s Non-Participating Fund.
United Envirotech recorded a net profit of S$9.3m for 3Q14
on the back of 23.0% increase in revenue to S$64.3m. Net
profit for 9M14 reached S$22.8m. Revenue from the
recurring water treatment business segment, jumped
117.2% y-o-y to S$20.2m while EBITDA increased 140.9%
to S$10.6m for 3Q14.
Separately, United Envirotech (UEL) has signed the
agreement with the Jiangsu Qidong Economic Development
Zone Binjiang Fine Chemical Industrial Park Management
Committee (Binjiang MC) to acquire, upgrade and expand
the industrial park wastewater treatment plant in Qidong,
Jiangsu Province, China. UEL will set up a 70:30 joint
venture with Binjiang MC to acquire the 15,000 m3/day
wastewater treatment plant currently serving the Binjiang
Fine Chemical Industrial Park (Binjiang). UEL will
subsequently upgrade the plant and expand the capacity to
30,000 m3/day using its membrane bioreactor (MBR)
technology.
Roxy-Pacific posted record net profits for the fourth quarter
and full year. Its net profit of S$44.8m for Q4 2013 was
91% higher than in Q4 2012. Revenue trebled to
S$169.7m. For FY2013, net profit was S$92.2m, up 58% in
FY2012. Roxy-Pacific is now eyeing investment
opportunities in Sydney, Melbourne, London and Phuket,
fresh from selling 14 of its 21 floors in a building in a prime
retail location in Hong Kong's Causeway Bay area this week.
The group is open to both property development and
investment (ie, recurring income) ventures, including hotels.
Keppel Corp has secured contracts to build three highspecification
KFELS B Class jackup rigs worth about
US$650m from new customer Fecon International Corp.
The three rigs are scheduled to be delivered progressively
within 2H 2016. The pricing of approximately US$217m
each, is largely in line with recent Transocean and UMW
contracts of US$218-220m per rig. These contracts bring
Keppel's YTD win to S$1.1bn, forming 18% of our
assumption of S$6bn for FY14.
Heeton and Ryobi Kiso announced that the JV has acquired
Enterprise Hotel in London for about S$48m. The latest
acquisition is part of Heeton’s 3 year strategic plan with
hospitality segment as the key engine of growth. Enterprise
Hotel, a freehold property, is located near Earl’s Court
Underground Station and currently comprises 100 hotel
rooms. With strategic location and upcoming major
refurbishing, the group sees a positive impact in revenue for
the coming years.
UE E&C has been awarded the main contract for the
proposed erection of one block of 19-storey educational
institution with one basement for Lee Kong Chian School of
Medicine, Nanyang Technological University at Mandalay
Road (Novena Campus) and one block of 7-storey School of
Medicine at Nanyang Drive (NTU’s Yunnan Garden
Campus). The total contract sum for the two campuses is at
approximately S$243.5m. With the addition of this contract,
the Group’s current order book is approximately S$750m.
T T J Holdings has secured new contracts of approximately
$40m. These contracts increase the Group’s latest order
book to $166m which it expects to be completed
substantially in 2015 and 2016.
Asiasons Capital is expected to report a loss for FY13,
mainly due to net fair value loss recognised in respect of the
Group’s investments in financial assets.
In property news, developers’ confidence in executive
condominiums (EC) remains strong, going by the latest
tender for a site in Sengkang. The 99-year leasehold site at
Anchorvale Crescent drew 12 bids at the close of its tender
period yesterday, with the top bid of $192.89m which
translates to $366.91 psf ppr. This bid was put up by
SingHaiyi Group's Phoenix Real Estate.
US market inched higher, even though the government
reported that retail sales unexpectedly fell in January.
Consensus was looking for no change last month, but sales
dropped 0.4%. Excluding auto sales, sales were flat. Sales
for November and December were also revised lower.
Higher-than-expected unemployment claims were also a
negative.
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