Today's Focus
Far East Hospitality Trust ' Initiate coverage with BUY rating and target price of S$1.10.

US stocks fell after the Federal Reserve Bank of Philadelphia President said QE3 probably won't boost growth or hiring and may jeopardize the central bank's credibility. The decline in equities came despite stronger-than-expected home prices. Taking into consideration that the Q3 results season is drawing closer, the stock market rally in the past 3 months and noting that global manufacturing and trade data has been weak in 3Q, it's little surprise that investors may consider moving aside first for the results season. The question is when; it seems that some are starting to do so now.

Stocks closely tied to global trade and manufacturing could be weak while those linked to Asian domestic demand and consumer staples are likely to fare better. The O&M sector should also fare better given their recent stream of contract wins.

DBSV Research is initiating coverage on Far East Hospitality Trust (Far East H-Trust) with a BUY rating and target price of S$1.10. Far East H-Trust, with pure exposure into Singapore hospitality sector ' Asia Pacific's fastest growing tourism market, is an industry leader with attractive earnings growth potential. It has reputable Sponsor (part of Far East Organization) backing, with potential pipeline to grow rooms by 49.1%.

Ezion has secured another two projects ' a refurbished service rig and a newbuild liftboat 'from an undisclosed Southeast Asian-based client, believed to be Petronas. Worth a total of US$283m, these projects take its FY12 YTD contract wins to US$1.1b. These two projects will be partly funded by proceeds raised recently from the issue of perpetual securities. We estimate Ezion has sufficient excess cash to fund the equity portion of at least two more liftboats before year end, especially given the strong pipeline. F11-14F EPS growth CAGR lifted to 39% from 36% previously. Maintain BUY rating with higher S$1.72 TP (Prev S$ 1.42).

Temasek Holdings has entered into an agreement to sell 400m shares in SingTel. We noted a large amount of shares were crossed at $3.20 this morning, which is at a discount of 2.4% from yesterday's closing price of S$3.33. Temasek has the option to sell an additional 100m shares if the demand is strong, which would be equal to 3.1% of Temasek's stake in SingTel, according to a term sheet seen by Dow Jones Newswires. Temasek owned 54.4% of SingTel as of March 31, according to its annual report.

As SingTel is a STI heavyweight, the news is likely to be a drag on the index in the current session. However, any downside below $3.20 should be modest, drawing more interest from yield seekers. At $3.20, SingTel shares yield 5.3% FY12F based on our analyst forecast. This lifts the yield of SingTel shares close to the FY12F yield of 5.46% for M1 and 5.7% for Starhub, based on our analyst forecast.

Mirach Energy is a step closer to commencing oil drilling in offshore Cambodia. Its associate company CPHL (Cambodia) has signed a drilling environmental impact assessment (EIA) contract with two environmental consulting firms.

Assessment starts this month and is expected to be done in about six months. An approval of the EIA report by the Cambodian Ministry of Environment will enable CPHL to begin drilling in Block D.

Z-Obee Holdings has entered into supply contracts with seven contractors to supply project lighting system for the office building of China Development Bank in Fuxingmen, Xicheng District, Beijing for an aggregate sum of about RMB26m. The Supply Agreements are expected to contribute positively to the Group's revenue and net profit for FY March 2013.

Wingstar Investment, Metro Australia Holdings and Maxdin successfully acquired the site at Prince Charles Crescent. Wingstar Investment is a subsidiary company of Wing Tai Holdings, while Metro Australia Holdings and Maxdin are, respectively, subsidiaries of Metro Holdings and UE E&C Ltd. Located in the tranquil Jervois precinct, the 256,000 sq ft leasehold site fronts the good class bungalows of the Chatsworth and Bishopsgate estates.

Source: DBSV