OCBC Report 28 Feb 14

KEY IDEA City Developments Limited: Looking outside for growth 4Q13 PATMI decreased 11.4% YoY mostly due to lower contributions from the property development segment and the absence of disposal gains recorded in 4Q12. On a full-year basis, FY13 PATMI cumulated to S$683.0m which was almost flat (up 0.7%) versus last year. Similarly, earnings per share came in 0.7% higher at 73.7 S-cents per share; this constituted 111% and 104% of our FY13 forecast and consensus, respectively, and somewhat lumpy from faster than anticipated progressive recognition but judged to be within expectations.  An ordinary final dividend of 8.0 S-cents per share was proposed. The group anticipates headwinds in the domestic residential market – its core business segment – going ahead and aims to accelerate its diversification plans into overseas growth markets, such as US, Japan, Australia, China and London. To this end, they have installed a new CEO, Grant Kelley who was the head of Apollo Global Management’s Asia Pacific real estate business, to spearhead this strategic shift. Maintain HOLD. Our fair value estimate dips to S$9.17 (30% RNAV disc), versus S$9.98 previously, mostly due to lower valuations of listed holdings and softer residential ASPs. (Eli Lee) MORE REPORTS ST Engineering: FY13 results in line STE reported a set of FY13 results that were generally in line with ours and the street's expectations. FY13 EPS of 18.73 S cents (flat versus FY12's 18.76 S cents) formed 99% and 104% of the street's and our prior forecasts. 4Q13 revenue grew 12% YoY and 25% QoQ to S$1.94b (recall that 3Q13 was a disappointing quarter). Land System's 4Q13 PBT jumped 126% to S$39.6m chiefly due to gain on disposal of a property, higher revenue and lower operating expenses. FY13 group revenue was S$6.63b, up 4%. PBT and net profit were S$730m (+2%) and S$581m (+1%). Final ordinary and special dividends of 4.0 S cents and 8.0 S cents bring FY dividends to 15.0 S cents, versus 16.8 S cents for FY12. Payout ratio is 80%, versus ~90% for FY09-FY12.Management expects group revenue and PBT in FY14 to be higher. We lower our FY14F EPS estimate slightly to 20.2 S cents from 20.6 S cents and trim our FV to S$3.84 (19x P/E peg) from S$3.91. Maintain HOLD. (Sarah Ong) Yangzijiang Shipbuilding: FY13 results within our expectations Yangzijiang Shipbuilding (YZJ) reported a 5% YoY fall in its 4Q13 revenue to RMB3.38b and a 8% decrease in PATMI to RMB746.3m, such that FY13 revenue and PATMI declined by 3% and 14% to RMB14.3b and RMB3.10b, respectively. This was within our expectations. A first and final dividend of 5 S cents/share was declared, similar to FY12, and translates into a yield of 4.4%. Management remained cautious on its outlook this year, but expects to see a rebound in vessel deliveries in 2015. Current order book stands at US$4.6b, comprising 111 vessels. Looking ahead, YZJ is seeking to clinch new order wins of US$2b in 2014 (FY13: US$2.9b). We make some minor adjustments to our FY14 PATMI forecast, and trim our fair value estimate from S$1.22 to S$1.21, still pegged to 9x FY14 core earnings. Maintain HOLD. (Low Pei Han and Andy Wong) CSE Global: FY13 PATMI below expectations CSE Global Limited (CSE) reported its FY13 results, with revenue from continuing operations falling 7.2% to S$416.0m, while core PATMI from continuing operations rose 5.5% to S$30.4m. This was below our forecast of S$34m due to additional provisions made for project overruns for a Middle-East project. Its current order book as at 31 Dec 2013 stood at S$227.2m, representing a decline of 18.4% from end 2012. On a bright note, CSE declared a final dividend of S$0.02/share and a special dividend of S$0.01/share. This will be paid on 20 May 2014 if approved by shareholders at its AGM. It also turned into a net cash position in end FY13, compared to a net gearing ratio of 19.2% as at 31 Dec 2012, due to proceeds received from its Servelec Group divestment which was used partly to repay its debt. We will attend an analyst briefing and will provide more details thereafter. Our Buy rating and S$0.96 fair value estimate (before adjustment for Servelec Group divestment) is under review due to a change in analyst coverage. (Wong Teck Ching Andy)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - The benchmark S&P 500 closed at a fresh record Thu, as investors welcomed dovish remarks from Federal Reserve Chairwoman Janet Yellen before the Senate Banking Committee. - Singapore's services sector raked in 6.4% more in 4Q13 sales than it did a year ago, but its pace of growth has slowed from a revised 7.9% in 3Q. - A revaluation gain of S$489.6m for The Metropolis office project in Buona Vista provided a big boost to Ho Bee Land's 4Q13 and FY13 net earnings. - An exceptional year-ago gain sent Thai Beverage Public Co's FY13 profit to a 33% drop from what would otherwise have been an 18% growth, the brewer of Chang beer said.