OCBC Report 10 Jun 14

KEY IDEA Swiber Holdings: Waiting for more contracts Swiber Holdings recently announced that it has secured a contract in Latin America worth US$80m. Though this would add to its order book, we still expect weak results for the next two quarters, unless the group clinches more contracts soon with an immediate start date. On a more positive note, Swiber has been able to establish a foothold in the growing energy sector in Latin America, while still bidding for work in its traditional markets like India. At its current price, the stock is already trading below half its book value. However, given the group’s 1) relatively poor earnings quality and lumpy operating cash flows, 2) dim outlook for at least the next two quarters, 3) high leverage and that 4) the stock has been trading at an average of 0.65x book in the past three years, we maintain our HOLDrating and S$0.63 fair value estimate (based on 0.5x FY14F P/NTA). (Low Pei Han) MORE REPORTS Sheng Siong Group: Acquiring HDB commercial property at Tampines Central Sheng Siong Group (SSG) announced it has exercised the option granted by S-11 Wan Jin Investment Pte Ltd to purchase a three-storey HDB commercial property at Block 506 Tampines Central 1 for S$65m. The property has a gfa of 3,876 sqm with a leasehold tenure of 99 years commencing from 1 Jan-91. The acquisition will be funded by internal funds and/or bank borrowings. The next major hurdle will be to obtain HDB’s approval for the acquisition as well as the various uses by existing tenants. If successful, SSG will be opening a 910 sqm store in 1Q15. The store will be incrementally enlarged in tandem with the scheduled expiry of various existing tenancies in 2016 and 2017. We opt to await regulatory approval before adjusting our forecasts. Maintain BUY with fair value estimate of S$0.68. (Yap Kim Leng)

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NEWS HEADLINES - US stocks rallied with the Dow and the S&P 500 extending record winning streaks amid a fresh burst of merger and acquisition activity on Wall Street. - Ley Choon Group has clinched five water/sewer-related contracts which are worth S$20.4m from the Singapore Public Utilities Board. - Tritech Group has been awarded a S$7.0m monitoring contract by the Land Transport Authority. - Interra Resources has completed development well CHK 1186 in the Chauk oil field of Myanmar as an oil producer. - Frasers Centrepoint Ltd could raise as much as US$358m by listing a hospitality industry trust business, two people with direct knowledge of the matter said. - RDL Investments, which is offering to take over property developer LCD Global Investments for 17 S-cents/share, has extended the offer closing date to 5.30pm on 23 Jun-14.