KEY IDEA |
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| Oil and Gas: Share price correction begets opportunities |
| YTD, the FTSE ST Oil & Gas Index has slipped 3.3%, versus the STI’s 1.3% gain. We believe investors should |
| take opportunity of the share price correction in the sector to accumulate quality stocks, as the softness |
| in the exploratory drilling market is largely seen as a ‘momentary pause’. The long-term fundamentals of the|
| oil and gas sector remain favourable. Maintain OVERWEIGHT on the sector, with Ezion Holdings [BUY, FV: S |
| $2.57], Keppel Corp [BUY, FV: S$12.25], Nam Cheong [BUY, FV: S$0.42] and Sembcorp Marine [BUY, FV: S$5.26] |
| as our preferred sector picks. (Andy Wong and Low Pei Han) |
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| MORE REPORTS |
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| ST Engineering: Secures S$460m of aerospace deals |
| Singapore Technologies Engineering Ltd (STE) has won new aerospace orders worth S$460m in 1Q14, which cover |
| a wide range of the aerospace sector’s suite of capabilities from airframe, component and engine |
| maintenance, to cabin reconfiguration and engine wash. Included in the contracts is a two-year deal with a |
| major airline for heavy maintenance of 20 Embraer E-190 aircraft at its San Antonio facility. While STE said|
| the contracts are not expected to have any material impact on its NTA or EPS for FY14, the orders will add |
| to its already quite substantial order book of S$13.2b (as of end 2013). Due to a change in analyst |
| coverage, we are reviewingour Hold rating and S$3.84 fair value. (Carey Wong) |
| |
| KepCorp: Extends near market, near customer strategy into China |
| Summary: Keppel Corp (KepCorp) announced that Keppel Offshore & Marine (Kep O&M) has signed a management |
| services agreement with Titan Petrochemicals Group (Titan) to manage Titan Quanzhou Shipyard (TQS) located |
| in Quanzhou, Fujian Province. TQS is also one of the largest shipyards in China, occupying some 110 ha with |
| a 3.6km coastline. Under the agreement which is for a 30-year period, renewable thereafter as mutually |
| agreed, the yard, managed by Kep O&M, will undertake projects using Keppel's proprietary designs. While the |
| agreement is not expected to have any impact on its NTA or EPS for FY14, KepCorp notes that the yard is an |
| extension of its “near market, near customer” strategy, which enables it to service the Chinese market with |
| its suite of proprietary solutions while meeting the requirement of building in-country. Recall that KepCorp|
| has another shipyard in China – Keppel Nantong – which undertakes specialized shipbuilding and offshore |
| fabrication. We like KepCorp for its “near market, near customer” strategy which should continue to keep it |
| ahead of the pack. Maintain BUYwith an unchanged S$12.25 fair value. (Carey Wong) |
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| For more information on the above, visit www.ocbcresearch.comfor the detailed report. |
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| NEWS HEADLINES |
| |
| - US stocks rallied Wed to end with the best gains in more than a month after the minutes of the latest FOMC|
| meeting revealed a more dovish stance than investors expected. |
| |
| - OCBC Bank issued its first Basel III-compliant bond - US$1b of 10-year fixed rate subordinated notes - |
| under its US$10b global medium term note programme. |
| |
| - Ezion Holdings unveiled a pact with AusGroup to explore opportunities in the logistics supply chain in |
| Australia's resources and marine sectors. |
| |
| - Keppel Offshore & Marine, through its subsidiary FELS Offshore, has inked a new deal to manage what will |
| be one of the largest shipyards in China when its construction is completed. |
| |
| - Artivision Technologies’ shares surged following the completion of a rights issue which saw the emergence |
| of Ching Chiat Kwong of Oxley Holdings as a substantial shareholder. |
| |
| - JES International said it was switching from an earlier mining investment to forestry as the latter |
| provided a better deal for the company. |
| |
| - Darco Water Technologies, whose shares have been suspended from trading since Mar 2012, has requested |
| resumption of trading on SGX today.
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