OCBC Report 16 May 14

KEY IDEA CWT Ltd: Solid 1Q14 results, more to come CWT Limited’s 1Q14 revenue increased 207% YoY to S$4.5b while PATMI was 30% higher at S$35.0m, forming 25.6% of our FY14 forecast. Excluding our net income forecast, which is the highest on the street (14.8% above the next highest, according to Bloomberg), CWT’s 1Q14 net income of S$36.1m would have formed 32.5% of the remaining analysts’ FY14 forecast, beating their expectations. We understand from management that CWT Jurong East Logistics Centre, which received TOP in Jan-14 and is currently 90% occupied, has barely started contributing to Logistics earnings but will do so from 2Q14 onwards. Additionally, CWT’s subsidiary recently received a Capital Market Service License from MAS. We understand from management this will increase the scope of brokering activities in Asia. We incorporate the new development and revise Financial Services’ revenue upwards. Together with updated financial asset prices, we derive a new TP of S$1.92 (previous: S$1.87) and maintain BUY. (Yap Kim Leng) MORE REPORTS Nam Cheong: Engines all geared up Nam Cheong Limited reported a solid set of 1Q14 results, with revenue soaring 73.5% YoY to MYR407.3m and PATMI jumping 98.7% to MYR71.1m. The latter exceeded our expectations even after adjusting for one-off gains. Management’s 2015 shipbuilding programme of 35 vessels reflects its belief that the PSV market would continue to surprise on the upside, coupled with an expected uptick in demand for the 6k BHP AHTS vessel class. Focus will remain on the shallow water regions. We lift our FY14 and FY15 PATMI forecasts by 4.8% and 1.7%, respectively. We expect Nam Cheong’s vessel sales momentum to gain further traction ahead, which would be a re-rating catalyst for the stock. Maintain BUY, with a higher fair value estimate of S$0.445 (previously S$0.42), pegged to 9.5x FY14F EPS. (Wong Teck Ching Andy) Noble Group Ltd: Maintain HOLD for now Noble Group (Noble) reported its 1Q14 results last evening, with revenue slipping 7.2% YoY to US$17,956.2m, mainly dragged down by its Metals, Minerals and Ores (MMO) business (revenue down 39%, tonnage down 27%). Nevertheless, the continued focus on profitability saw operating income from supply chains improved 30% to US$497.5m; margin also improved from 1.98% in 1Q13 to 2.77% in 1Q14. Profit from continuing operations climbed 5.8% to US$232.3m, while net profit jumped 268.7% to US$152.3m; this meeting 32.4% of our full-year forecast. At the moment, we hold off making any major revisions to our estimates until we get a better sense of its continuing business reporting format. Nevertheless, our fair value improves from S$1.26 to S$1.31 as we roll forward our 13.5x peg to blended FY14/FY15F EPS. Maintain HOLD.(Carey Wong)

Swiber Holdings: Weak results may persist for now Swiber Holdings reported a 35.6% YoY fall in revenue to US$199.5m but saw a 139.3% increase in net profit to US$48.0m in 1Q14, boosted by a US$95.1m gain on disposal of subsidiaries (Kreuz). Excluding this one-off and a US$20.9m fair value loss on financial liabilities, the group saw a core net loss of US$26.2m in the quarter, below our expectations. Looking ahead, we expect weak results for the next two quarters, unless the group clinches contracts soon with an immediate start date. With the slowdown in order win momentum, high net gearing and lumpy operating cash flows, the stock is understandably trading at its half book value. We switch our valuation from P/E to 0.5x FY14F P/NTA (historical 3-year mean ~0.65x), given our forecast of a core net loss for FY14. As such, our fair value estimate slips from S$0.72 to S$0.63. Maintain HOLD.  (Low Pei Han) Lian Beng Ltd and KSH Holdings: Agree to acquire Prudential Tower A consortium comprising Lian Beng Ltd (32%), KSH Holdings (28%), KOP Limited (25%) and Centurion Global Ltd (15%) has agreed to acquire from Keppel REIT its 92.8% interest in Prudential Tower for S$512m. Based on 221,080 sq ft of net lettable area involved in the transaction, the price translates to S$2,316 psf and a net yield of about 3.5%. We believe that this is fairly decent for a transaction of this size, and is in line versus latest strata transactions and 3.5% below the S$2400 psf mark that Keppel REIT was reportedly looking for. This acquisition is expected to complete in Sep 2014. We understand that the consortium could be exploring strata sales of the office building as leases end going forward. Maintain HOLD for Lian Beng with an unchanged fair value estimate. Maintain BUY for KSH with an unchanged fair value estimate of S$0.73. (Eli Lee) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - The US stock market had its worst day in five weeks Thu, as investors turned risk-averse amid concerns of stalling growth in the euro zone and mixed domestic economic data. - Singapore retail sales fell for the second consecutive month, declining 3.9% YoY in Mar, dragged down by lower sales of motor vehicles. - Keppel REIT has struck an agreement to sell its 92.8% stake in Prudential Tower for S$512m to a consortium comprising KOP Limited, Lian Beng Group, KSH Holdings and Centurion Global. - Olam International's earnings for 3QFY14 more than doubled to S$396.1m from S$108.5m, boosted by exceptional items. - KrisEnergy has reported a 1Q14 net loss of US$18m, compared with a net loss of US$500k a year ago. - Croesus Retail Trust posted 3QFY14 DPU of 1.76 S cents, 8% higher than its forecast 1.63 S cents. - Hong Leong Asia posted an 8.1% decline in net profit to S$13.3m for 1Q14, owing to margins compression.