OCBC Report 13 Feb 14

KEY IDEA KSH Holdings: Successful launch at Beijing condo project KSH Holdings reported 3QFY14 PATMI of S$9.9m, up 22% YoY, mostly due to increased contributions from the construction and property development segments. 9MFY14 PATMI cumulates to S$33.5m, up 50.3%, and makes up 69% of our full year forecast. We judge this to be mostly within expectations, and anticipate a back-loaded year in terms of revenue recognition from construction and development projects. In Jan-14, the group launched its 45%-owned Beijing condo project (Liang Jing Ming Ju Phase 4) and saw a strong performance. Over 60% of the residential units (comprising a total net sellable area of 31.4k sqm) were sold at average prices of RMB 23.5k psm – higher than previously anticipated – and we expect this project’s contribution to drive continued earnings growth in FY15 as it achieves TOP. Maintain BUY with an unchanged fair value estimate of S$0.73. (Eli Lee) MORE REPORTS Far East Hospitality Trust: 4Q13 results in line FEHT's 4Q13 results were in line with our expectations and the street’s. FY13 distribution per stapled security of 5.64 S cents formed 101% of our forecast and 99% of the street’s median forecast. RevPAR for the hotels, excluding the Rendezvous property (which was acquired on 1 Aug 2013), was S$164.8, down 5.3% YoY, which was expected given challenging industry conditions. There has been some weakness at the three Orchard properties, namely, Orchard Parade Hotel (OPH), Quincy and The Elizabeth Hotel, possibly due to relative interest in Marina Bay area hotels. Village Changi Village has been impacted by competition too. For FY14, hotel room rates for corporate accounts have been locked in at similar or slightly higher rates than last year. Corporate accounts give 35% better rates than wholesale accounts and the intention is to replace some of the wholesale business. We forecast low-to-mid single digit RevPAR growth for FEHT in FY14. Management is considering AEIs at OPH and Elizabeth Hotel starting in 4Q14. Increasing our cost of equity from 7.6% to 8.7%, we reduce our FV from S$0.92 to S$0.78 and maintain a HOLD rating on FEHT. (Sarah Ong) Biosensors International Group: Weaker than expected 3QFY14 showing Biosensors International Group (BIG) reported another set of lacklustre results, with its 3QFY14 core PATMI dipping by 54.2% YoY to US$11.1m despite a mild 1.4% increase in revenue to US$82.5m. This fell short of our below-consensus forecast. BIG continued to face weak licensing and royalties revenues, coupled with ASP and cost pressures. Management has initiated on cost reduction and organisational restructuring plans, and expects to see an improvement from 4QFY14. Given the continued industry challenges, BIG expects its FY14 revenue to be comparable with FY13. This is in contrast to its guidance made in 2QFY14 in which it expected total revenue growth to be moderately positive over FY13. We pare our FY14 and FY15 core earnings projection by 16.3% and 6.7%, respectively, and maintain our SELL rating on BIG with a lower DCF-derived fair value estimate of S$0.77 (previously S$0.80). (Wong Teck Ching Andy) SingTel: 9MFY14 mostly in-line; outlook tad mixed SingTel reported a 7.3% YoY decline in 3QFY14 revenue to S$4263.3m, while core earnings (excluding exceptionals) climbed 5.5% to S$872.3m. For 9MFY14, revenue slipped 7.2% to S$12719.7m, meeting 75% of our full-year forecast, while core earnings rose 3.1% to S$2690m, or about 73% of our FY14 estimate.  Going forward, the outlook is getting slightly more mixed. While the telco still expects consolidated revenue to decline by mid-single digit level and EBITDA to decline by low single-digit level; SingTel now guides for Group Consumer revenue to fall by low double-digit level versus high single-digit previously, though EBITDA’s decline remains at low single-digit level. It has reduced its capex guidance back to S$2.2b from a previously revised S$2.5b. Otherwise, the rest of its guidance remains unchanged. We will have more after the analyst teleconference later. For now, we maintain our HOLD rating but place our S$3.81 fair value (based on SOTP) under review. (Carey Wong)

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NEWS HEADLINES - US stocks slid Wed as investors paused after the largest four-session rally in more than a year. The Nasdaq Composite managed a small gain. - Challenger Technologies proposed a final tax-exempt dividend of 1.42 S cents per ordinary share for FY13. - Fraser Centrepoint Ltd's 1QFY14 pre-tax profit was up 61.6% at S$176m, although net profit fell 7% at S$121m due to the absence of revaluation and exceptional gains seen in previous year. - Religare Health Trust's DPU for 3QFY14 was 2.14 S cents, 4.9% higher than its projection of 2.04 S cents. - Ezion Holdings has terminated a bid to buy 45.15% of the enlarged share capital of mainboard-listed Ocean Sky International. - SBS Transit posted a 39.8% drop in FY13 profit as higher costs outweighed revenue growth in its key businesses.