OCBC Report 19 Feb 14

KEY IDEA United Envirotech: More in store for FY15 Summary: Although United Envirotech Ltd (UEL) posted 9MFY14 earnings that fell short of our forecast, management remains upbeat about its waste-water treatment prospects in China, especially after getting the nod to acquire the membrane making operations of Memstar Technology. UEL not only expects to see cost-savings from making its own membrane, but it is also looking to go into third party membrane sales soon. To reflect the latest development, we bump up our FY15 revenue estimate by 20% but pare earnings by 2%. We also raise our valuation peg from 15x to 20x FY15F EPS, thus improving our fair value from S$1.00 to S$1.30. But given the limited upside, we maintain our HOLD rating. (Carey Wong) MORE REPORTS CapitaLand Limited: Marred by divestment and impairment losses Summary: CapitaLand’s 4Q13 PATMI decreased 45.6% YoY to S$142.9m, mostly due to divestment losses from its 20% Australand stake, impairments from investments in China, India, Abu Dhabi and Australia and forex losses. FY13 PATMI cumulates to S$849.8m, which fell 9.5% short of our full year forecast, and we judge these results to be below our expectations and consensus. Excluding one-time items, however, operating PATMI for FY13 stands at S$527.7m, which is a respectable 42.9% increase. 4Q13 topline is S$1,085.1m, down 2.3% YoY mostly due to the deconsolidation of Australand and lower revenues from domestic development projects. Over FY13, we saw 1,260 residential units sold in Singapore, up significantly versus the 681 units sold in FY12. In China, residential sales were mostly flat at 3,009 units – still a healthy pace – which is a mild 4.8% dip versus FY12. Chinese township project sales increased 35.6%% to 4,679 units. A dividend of 8.0 S-cents per share was proposed. We would speak with management regarding these results and, in the meantime, maintain BUY with our fair value estimate of S$3.77 under review. (Eli Lee)

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NEWS HEADLINES - US stocks ended Tue generally higher with the Nasdaq Composite recording its eighth consecutive session of gains, the longest since Jul 2013. - Market watchers saw red and yellow over reports that Temasek Holdings is toying with selling its US$3.1b stake in Thailand's Shin Corp to Singapore Telecommunications. - Global Logistic Properties has signed an agreement with a group of Chinese state-owned enterprises and financial institutions for an up to US$2.5b investment in the company. - Shares in Biosensors International Group shot up 14% in a matter of minutes yesterday on reports that a Chinese private-equity investor may offer to privatise the company. - United Overseas Bank has doubled its number of cross-border loans to businesses since setting up its first foreign direct investment (FDI) advisory unit here in Jun 2011. - Neo Kim Hock, executive chairman of Blumont Group, has been sued by Coutts & Co, taking the sum banks and brokers are seeking to recover from an Oct crash to at least US$140m.