Today's Focus

- Nam Cheong - Yard visit reinforces our positive view;?- maintain BUY with TP of S$0.30
- Petra Food - An interesting pure leading chocolate confectionery player; upgrade to BUY, TP raised to S$3.97

Our analyst's recent visit to Nam Cheong's shipyard in Miri, Sarawak reinforces our positive view. FY12 is already a record year for Nam Cheong in terms of number of vessels sold (18 sold YTD). The Group has hit a record high for new contracts in 2012 and this should drive healthy earnings growth in
FY13/14. More order flows from Petronas linked contracts in Malaysia could be expected in 1H-FY13, as activities pick up steam on the ground. We believe the FY14 newbuilding programme is likely to be larger than that in FY13, in line with continuing robust outlook for oil & gas E&P activities, and we
remain comfortable with our projection of close to 30% earnings CAGR over FY11-13. Maintain BUY with TP of S$0.30, based on 9x FY13 earnings.

We are positive on Petra Food's proposed disposal of its Cocoa Ingredients (CI) business to Barry Callebaut for US$950m (cash/debt-free basis). In our view, this looks attractive, implying 22.5x/ 23.5x P/EBITDA on our FY12F/13F estimates and presents an attractive avenue to unlock value for
shareholders. In 3Q12, Petra's performance was below expectations, dragged by the CI division, which recorded a 58% y-o-y slump in EBITDA. Post this transaction, the focus would solely be on its Branded Consumer (BC) division which has better margins and stable growth. Balance sheet would also be stronger, with US$300m cash (60 Scts/share), after paring down existing debt. We are positive on the developments for Petra in the longer term and expect it to further re-rate as a pure consumer play with a leading market position in Indonesia and the Philippines and presence in regional markets. It is also an attractive target for global chocolate confectionery players. Upgrade to BUY, TP raised to S$3.97 (Prev S$ 1.95).

Keppel Corp announced the award of two jackup orders from PEMEX Exploracion y Produccion, a subsidiary of Mexico's national oil company, Petroleos Mexicanos (PEMEX), which we have highlighted earlier. Worth a total of US$420m (i.e. US$210m/unit), this was +5% ahead of our expectations of US$200m, and a significant 8.8% higher than the last KFELS B Class jackup newbuilding ordered in May 2011 of the same specifications (and region of construction). With these orders in the bag, KEP's FY12 YTD order wins (ex-Petrobras) now stands at S$4.7bn, vs. our assumption of S$5.0bn for the full
year. Including Petrobras orders, FY12 YTD order wins have been raised to c. S$11.0bn vs. S$11.3bn full year assumption. No change to our numbers, S$12.65 TP and BUY call.

China Merchants Holdings (Pacific) continues on the acquisition trail with the purchase of the Jiurui Expressway in Jiangxi Province, China for RMB675m. With this acquisition, CMHP's toll road portfolio will comprise 5 expressways, diversified in 4 provinces with the expiry dates of the respective toll concession periods ranging between March 2025 and November 2033. CMHP intends to finance the acquisition by the issue of 72.66m new shares at the issue price of S$0.84, which is at a premium of about 18.3% to the last closing price, the transfer of CMHP's property development business in New Zealand to the sellers and a cash consideration of RMB75m. Based on proforma estimates, the deal is NAV-accretive, though there is unlikely to be any immediate earnings accretion. Sembcorp Marine is acquiring a 34.5-hectare site for the
Phase II development of its Integrated New Yard Facility. Located at Tuas View South Extension in the west of Singapore, the 34.5-hectare site is the second phase of the planned 206-hectare New Yard Facility that Sembcorp Marine announced on November 4, 2009 to position the Group for sustainable growth and long-term competitiveness.


HH Properties, a joint venture between Hiap Hoe and SuperBowl Holdings, said that its first hotel development project in Singapore is on track for completion, with two hotels to be fully open to guests by the first quarter of next year. The $300m development will include Ramada Singapore and Days Hotels Singapore, a commercial tower, a shopping mall, and a range of restaurants and bars flanking Zhongshan Park in Balestier. This marks the Ramada and Days Hotels brands' first foray into Singapore. Both hotels will be managed by Wyndham Hotel Group.

Investment sales of property - which refer to transactions of $10m and above - have fallen to about $6.9bn so far this quarter, from the $9.3bn in Q3, estimates Savills Singapore. The slowdown came amid a halving in deals originating from the private sector to $3.7bn so far in Q4 from $7.2bn the previous quarter. Of the $28.7bn transacted year-todate, the residential sector continued to make up the lion's share - of about 45% amounting to $13.1bn.

US stocks closed flat after Fed announced an expansion of bond purchases to support the economy, which was widely expected by investors. The Fed said it will be purchasing longer-dated Treasuries after Operation Twist ends later this month. Fed officials said they would buy $45bn of Treasuries each month beginning in 2013, and would also continue buying $40bn of mortgage-backed securities. The central bank said it will continue buying bonds until the unemployment rate hits 6.5%. It currently stands at 7.9%. In its growth forecasts, the Fed said the unemployment rate will fall to between 7.4% and 7.7% by the end of 2013.

Source: DBSV