Today's Focus

United Envirotech - Improved earnings flow; maintain Buy, TP raised to S$0.74

US and European markets fell as investors locked in recent gains after political uncertainties in Eurozone resurfaced. The Spanish Premier faced opposition calls to resign amid reports about illegal payments. There was also anxiety ahead of the Italian elections this month. Bond yields rose with Spain's 10-yr government yield increasing to 5.44% from 5.2%, which is still far below the 7% threshold that investors fear.

For Singapore, the focus continues to be on the earnings season. STI had held above its 15-day EMA since late Nov last year. This indicator is currently at about 3260, which should provide near-term support on pullback.

3Q13 results for United Envirotech exceeds our estimates by >15%, thanks to higher Engineering, Procurement and Construction (EPC) sales and better Treatment margins. Growth visibility is backed by rising Treatment income and >Rmb1bn EPC orders in bidding stage. Post 3Q results, our analyst has raised FY13/14F earnings by 7%/5% to account for higher EPC recognition and order wins. Maintain Buy,
TP raised to S$0.74 (Prev S$ 0.67).

For the first time in seven months, Singapore's purchasing managers' index (PMI) has signalled a marginal expansion of the manufacturing sector. The overall PMI for January rose to 50.2, just above the 50-point threshold that divides growth from contraction. It rose 1.6 points from the December reading of 48.6, thanks to expansion in new domestic and export orders, the stockholdings of finished goods, as well as employment. The electronics PMI stayed in contraction territory for a fourth straight month. Despite rising 3.3 points from December, the reading of 49.9 is still below the 50-point threshold.

According to Financial Times, Singapore Exchange is in talks to buy a stake in LCH Clearnet, Europe's biggest clearing house, or to become part of the deal in which the London Stock Exchange Group is set to take a controlling 60% stake.


Courts Asia continues to expand in existing markets Singapore and Malaysia through physical and online stores as well as a wider array of offerings. Courts is planning to launch a new store at JEM retail mall in Jurong this year, which comes on the heels of a new store in Buona Vista last September. Courts is also aiming to first build up significant traction in Indonesia, while noted that other markets in the region such as Vietnam and the Philippines also offer growth prospects.

Technics Oil and Gas has been awarded two contracts worth a total of S$6.6m. The contracts are for the supply of Compressors Packages for Offshore Vietnam and Thailand.

Elektromotive Group proposes to issue to the Subscriber 0% equity linked redeemable structured convertible notes due 2018 with an aggregate principal amount of up to S$20m. The Subscriber is a Cayman Islands domiciled open-ended fund whose investors are mainly based in Asia. The proceeds will be used to fund the capital expenditure, working capita land other operational requirements.


China Oriental Group expects to report lower net profit for FY Dec12 as compared to the previous year, mainly attributable to significant decrease in the average selling prices of its products and the substantial loss incurred by a subsidiary.

Huan Hsin is expected to report a substantial increase in the net loss for FY Dec12. The sustained economic weaknesses in the market, especially in Europe and the US, and the intensified competition in the industry have resulted in the continued operating losses of some of the subsidiaries of the Group.

HSR Global is expected to report a net loss for FY12 mainly due to start-up losses from new business units, softer property market, increased operating costs and one-off retrenchment costs.

Hengxin Technology expects to record a materially lower net profit for 4Q12 compared to 4Q11, primarily attributed to the continuing weak market demand for its main product, RF Coaxial Cables and increase in operating expenses.

Source: DBSV