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22 Feb 12 ARA Asset Mgmt - Victory in sight (Buy, TP $1.68)
Results in line; catalysts in sight. ARA’s FY11 net profit was up 7% YoY to $68.2m, in line with expectations. A higher-than-expected final dividend per share (DPS) of 2.7 cents was declared, bringing full year DPS to 5 cents. The higher minimum dividend guidance of 5 cents p.a. is a positive surprise, while the potential listing of a RMB-denominated REIT in 1H12 and the final closing of Asia Dragon Fund II by 1H12 are near-term share price catalysts. Reiterate BUY with a target price of $1.68.
21 Feb 12 Raffles Medical Group - Optimism priced in (Downgrade to Hold, TP $2.73)
gain on investment properties, the results were within our expectations. A final dividend per share of 3 cents was declared. Full-year dividend per share thus came up to 4 cents, translating into a yield of 1.6%. Maintain target price of $2.73 but downgrade to Hold as share price is now near our target price.
21 Feb 12 OCBC - Valuations not enticing (Sell, TP $7.50)
Sell maintained. While 2011 earnings were flat YoY, underlying trends were commendable, with healthy top line growth (investment income aside), cost containment and growing regional contributions (41% of group pretax with 29% of group pretax from OCBC Malaysia). However, valuations at this stage are not enticing with the stock trading at a prospective 2012 P/BV of 1.3x for a relatively low prospective 2012 ROE of 10.9%. Our S$7.50 TP tags on a P/BV of 1.1x to the stock.
21 Feb 12 Tiong Seng Holdings - Meeting expectations (Buy, TP $0.330)
Growth in all segments. Tiong Seng reported full-year FY11 net profit of $27.2m, in line with what we had expected. Revenue soared by 64% YoY to $414.5m, from $252.3m a year ago, due to improvements across all business segments. The construction division saw a 55% jump in revenue to $350.7m for the full year, thanks to a higher amount of work done on existing contracts and the commencement of new contracts secured last year. Revenue from sales of development properties also more than doubled to $53.8m as a total of 456 home units were sold in FY11, up from 55 home units last year.
17 Feb 12 Sembcorp Marine - Yet another contract win (Buy, TP $5.58)
Secures new US$213m jack-up order. Sembcorp Marine (SMM) has announced a new jack-up order worth US$213m, which has better margins due and a shorter delivery time. It will construct a Pacific Class 400 jack-up rig for customer Safin Gulf. This latest contract win is positive for SMM, and the news should propel its share price even higher. We maintain our Buy recommendation and target price of $5.58.
17 Feb 12 SingTel - Margins to remain under pressure (Downgrade to Hold, TP $2.95)
Downgrade to Hold. We expect SingTel’s EBITDA margin to remain under pressure for the next few quarters as the telco focuses on building its mobile customer base aggressively in Singapore. While it expects long-term benefits, the costs related to its build-up of mobile device content, as well as subscriber acquisition and retention, are expected to stay high, thus eating into margins.
16 Feb 12 The Real Deals - Appeal of the Red Earth
For more than two years, house hunters keen on getting a home in Tanah Merah, which means Red Earth, can only look to the secondary market. Optima @ Tanah Merah was the last project to hit the primary market in that area in eastern Singapore. The 297-unit condominium was launched in July 2009 and was fully sold in less than two months at a median price of $830 psf. Last week, a state land next to the decades-old Bedok Court, a short distance away from Optima, was successfully auctioned with seven bids. The top bid of $534.2 psf ppr came from a joint venture between Far East Organization, Frasers Centrepoint and Sekisui House, and it was just a whisker above the next highest offer of $526.3 psf ppr. Based on an estimated breakeven of $920 psf, the developer could be eyeing an average selling price of at least $1,100 psf, possibly reaping more than $90m in profits over an estimated four-year project completion period. The expected selling price of $1,100 psf is supported by transactions in the vicinity. Last December, a handful of units at Casa Merah changed hands at an average price of $1,054 psf. In the same month, a unit at Optima @ Tanah Merah sold for $1,072 psf. Although the developer is likely to gun for at least $1,100 psf, we do not expect sales to be brisk, as evidenced by the recent launches (exceptions are Watertown and The Hillier, two well-located mixed-use projects). In our view, the project may attract a 30-50% take-up rate in the first few months, before slipping into an extended period of slow sales. Separately, rental for new units in the Tanah Merah area stood at about $3.5 psf pm as at the end of last quarter, according to our estimates. This works out to a healthy gross yield of 3.8%, another reason why we think the selling price of at least $1,100 psf is not at all optimistic.
16 Feb 12 Goodpack Ltd - Down but not out (Buy, $TP $2.15)
Below expectations. 2QFYJun12 results were below market expectations. This was due to demand weakness as well as higher-than-expected costs on its new IBC leasing programme. The bottom line for the quarter came in at US$10.7m, down 6% yoy and down 9% qoq despite the second quarter being seasonally stronger.
16 Feb 12 Ezion Holdings - Fulfilling its promise (Buy, TP $1.35 - raised from $0.99)
On-track execution. Ezion has announced two developments that have validated the positive outlook for the company. First, it has secured another service jack-up contract, and second, it has effected the sale and leaseback of another liftboat to manage its capital for expansion. As a result, its share price has surged and we believe that its discounted ratings should be a thing of the past. We are raising our core earnings forecasts for FY13F and our target price is increased to $1.35. Reiterate Buy.
16 Feb 12 Genting Singapore - After a year to forget, upbeat on 2012 (Buy, TP S$2.10)
Look to 2012. Genting Singapore (GENS) will release its 4Q11 results on 22 Feb. We expect it to record 4Q11 EBITDA of c.S$350m bringing 2011 EBITDA to S$1.6b (c. +15% YoY), within expectations. We understand that the mass market segment compensated for slower VIP volume in 4Q11. Going forward, we are upbeat on 2012 post the opening of the Equarius Hotel & Beach Villas and potential expansion into Japan and Mongolia. Maintain Buy but raise TP to S$2.10.
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