Today’s Focus
United
Envirotech - Solid execution to sustain re-rating.
Maintain HOLD on limited upside
to target price of S$1.37
Vard -
Signs LOIs for two PSVs. Maintain BUY call with
target price of S$1.21
FY14 earnings for United Envirotech
fall short of our
expectations. UENV reported FY
net profits of S$21m against
our forecast of S$28m. The company
sank into the red with a
S$1.2m loss in 4Q14, weighed down
by higher staff and
interest expenses which compressed
operating margins. We lift
FY15F earnings by 11% to incorporate
Memstar, offset by
lower Treatment, target price
raised to S$1.37 (Prev S$ 1.31).
FY15 earnings rebound hinge on
effective execution and cost
management. Maintain HOLD on limited
upside to target price.
Positive industry newsflow could
buoy share price but direct
catalysts or strong results would
better sustain re-rating.
Vard has signed letter of intent
(LOIs) with Nordic American
Offshore for the design and construction
of two Platform
Supply Vessels (PSVs), and an
option for a third vessel. This
marks Vard’s third and fourth
contract wins since the start of
the 2Q, and its eleventh and twelfth
newbuilds since the
beginning of 2014. Delivery is
scheduled from Vard Aukra in
Norway in 2Q and 3Q 2015. Upon
effective of the LOIs by end
of 2Q, we estimate these could
add over NOK1bn to Vard's
orderbook. Order win momentum
has been strong this year.
Excluding these LOIs, Vard has
secured over NOK7bn new
orders YTD-FY14. We maintain our
BUY call with target price
of S$1.21. Improving earnings
execution on a sequential basis
hereon will be the key catalyst.
SembCorp Marine has secured a
long-term Favoured Customer
Contract (FCC) from GasLog LNG
Services to provide shiprepair,
refurbishment, upgrading and related
marine services
for its managed fleet of 20 LNG
carriers. GasLog LNG Services
is a wholly-owned subsidiary of
GasLog, an international
owner, operator and manager of
LNG carriers. With the
signing of this long-term contract,
Sembawang Shipyard can
anticipate the refit of 3 to 5
GasLog's LNG carriers each year.
US Indices Last Close Pts Chg
% Chg
Dow Jones
16,743.6 26.5 0.2
S&P
1,925.0 1.4 0.1
NASDAQ
4,237.2 (5.4) (0.1)
Regional Indices
ST Index
3,302.2 6.4 0.2
ST Small Cap
558.5 0.1 0.0
Hang Seng
23,081.7 71.5 0.3
HSCEI
10,249.7 64.5 0.6
HSCCI
4,265.1 (7.7) (0.2)
KLCI
1,864.3 (9.1) (0.5)
SET
1,440.9 25.2 1.8
JCI
4,912.1 18.2 0.4
PCOMP
6,710.4 62.8 0.9
KOSPI
2,002.0 7.0 0.4
TWSE
9,075.9 (33.1) (0.4)
Nikkei
14,935.9 303.5 2.1
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011
2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 616
Total Daily Vol (m shrs) 1,464
12m ST Index High 3,302
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large
Cap
Rec’n Price (S$)
2 Jun
Target Price
(S$)
ComfortDelgro Buy 2.330 2.50
Global Logistic Properties Buy
2.770 3.42
Mapletree Greater China
Commercial Trust
Buy 0.895 1.02
Thai Beverage Public Buy 0.640
0.68
Stock Picks – Small
Cap
Rec’n Price (S$)
2 Jun
Target Price
(S$)
Vard Holdings Buy 1.120 1.21
Nam Cheong Buy 0.390 0.47
Centurion Corporation Buy 0.725
0.86
Source: DBS Bank
Singapore
Wired Daily
Page 2
Sembcorp Industries strengthens
its presence in China’s
Jiangsu province with the signing
of a joint venture
agreement to acquire and upgrade
an existing wastewater
treatment plant in Lianyungang
Lingang Chemical Industrial
Park (LCIP). Plans are in place
by the Jiangsu Environment
Protection Department to replicate
Sembcorp’s model in
other industrial parks in Jiangsu.
The upgrading is targeted
to be completed by end 2015 and
the enhanced industrial
wastewater treatment plant will
have a capacity of 20,000
cubic metres per day. The total
project cost of RMB130m
(approximately S$26.1m) will be
funded through a mix of
equity and borrowings.
Longcheer Holdings wishes to inform
shareholders that the
Company has been approached by
interested persons in
relation to the potential acquisition
of certain subsidiaries
within the Group. Discussions
are on-going and there is no
certainty whatsoever that these
discussions will result in any
transaction.
DeClout is looking to acquire
the entire issued and paid-up
share capital of Netipay for a
purchase consideration of
approximately $4.72m. Netipay
will eventually evolve into a
mobile cloud platform and proprietary
payment processing
service provider comprising Indonesia-based
PT Max
Interactive Technologies (Maxitech)
and Matrix Treasure.
Chip Eng Seng has secured a $165m
contract from the
Housing & Development Board
(HDB) for construction works
at Sembawang Neighbourhood 1 Contract
10. As at 31
March 2014, the Group’s order
book stood at $453m.
Factoring in this latest contract
win, the Group’s order book
rises above the half a billion
mark once again to hit $618m.
W Corporation announced that it
has obtained the
Approval-in-principle (AIP) from
SGX for its proposed
S$490.9m acquisition of YuuZoo
Corporation. YuuZoo is
one of the world’s leading targeted
e-commerce social
networking platform. The proposed
acquisition would be
satisfied with the issuance and
allotment of approximately
490.9m W Corp shares to existing
YuuZoo shareholders,
resulting in a reverse takeover
of W Corp (RTO). As part of
the proposed RTO exercise, W Corp
will also be undertaking
a proposed share consolidation
exercise pursuant to which
10 existing W Corp shares will
be consolidated into 1 new
W Corp share.
The International Air Transport
Association (Iata) has
trimmed its industry forecast
for the second time this year,
projecting a combined net profit
of US$18 bn for global
carriers, owing to slowing trade
and weaker business
confidence linked to China's economy.
This is on the back
of revenues of US$746 bn, which
translates to a thin profit
margin of 2.4%. Iata last cut
its forecast by US$1 bn to
US$18.7 bn in March, citing higher
fuel costs, from an
earlier estimate of US$19.7 bn.
However, profitability has
been on an upward trend overall,
gaining momentum from
US$6.1 bn in 2012 to US$10.6 bn
in 2013 - no small feat
for an industry which has clocked
profits in only half the
years since 1945.
US markets finished higher with
May ISM manufacturing
showing continued expansion (actual
55.4, consensus 55.5,
previous 54.9). Broadcom Corp.
shares rose after saying it
will explore options for its cellular
base band business.
General Electric Co. expects about
US$10bil of orders from
Latin America this year driven
by infrastructure spending
from electricity and clean water
to transportation. Attention
is on Europe later this week on
expectations that the ECB
will unleash an array of measures
to jump start the economy
and ignite prices to confront
deflation threat. These include
negative interest rates and conditional
liquidity for banks.
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