OCBC Repoer 4 Feb 14

KEY IDEA SIA Engineering: 3Q14 results a miss Summary: SIA Engineering Company's (SIAEC) 3Q14 results missed ours and the street's expectations. 9M14 basic EPS of 18.0 S cents formed 70% of ours and the street's prior FY14 estimates. 3Q14 revenue climbed 2.0% YoY to S$283.8m but operating profit fell 19.2% to S$25.2m due to staff, subcontract and material costs. Share of profits from associated and JV companies expanded by only 2.5% to S$41.0m. 3Q14 PATMI thus contracted 9.7% to S$60.5m. 9M14 PATMI and basic EPS are down 1.8% and 2.8% respectively. We lower our FY14F basic EPS forecast to 24.2 S cents, 6% lower than our previous estimate of 25.7 S cents. Rolling forward our model to FY15F figures, we reduce our FV from S$5.14 to S$4.77 (based on EPS forecast of 25.1 S cents and a lower peg of 19.0x, versus 20.0x previously). Maintain HOLDon SIAEC. (Sarah Ong)

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NEWS HEADLINES - The US stock market closed with sharp losses on Mon, amid a much weaker-than-expected reading on manufacturing data and concerns over a slowdown in China. - China's official services sector PMI fell to a five-month low in Jan, confirming the world's second-largest economy is slowing as the government continues to implement its reform plans. - Sembcorp Industries has agreed to acquire 45% of India's NCC Power Projects for 8.48b rupees (S$175m), and will ink further agreements to take up another 20% to make up a majority stake. - Religare Health Trust has entered into agreements worth S$68.8m with its sponsor Fortis Healthcare to acquire a hospital facility as well as its related business services and equipment. - Swiber Holdings said that it had secured five "sizeable" contracts worth a total of US$235m. - ASX Ltd will hire staff for a new office in Singapore this year as Australia's main exchange operator seeks to do more business with Asian hedge funds and proprietary traders.