DBSV S'pore Wired Daily 6 May 2013

kiasutrader

Publish date: Tue, 07 May 2013, 10:26 AM

Today's Focus

SembCorp Marine - 1Q13 results below, buoyant rig demand but margins under pressure. Maintain HOLD with a lower TP of S$4.70

SembCorp Marine's1Q13 results below expectations, net profit up only 5% on slower than expected revenue recognition. Our analyst has cut FY13/14 net earnings by 8%/4%, factoring in slower revenue recognition. Healthy rig demand but keen competition could cap margins recovery. Maintain HOLD with a lower TP of S$4.70 (Prev S$ 5.00).

Cosco Corporation's1Q13 results were way below consensus. The excess shipbuilding capacity, weak shipping market and the recent yen depreciation which has wiped out cost advantages of the Chinese yards and may lead to more bulk carrier orders being channeled to Japan, have prompted us to cut FY13/14F earnings by 43/44%. Maintain FULLY VALUED; TP reduced to S$0.75 (Prev S$ 0.80). Weak industry prospects will continue to drag on earnings over the next 2 years.

Vard Holdings has entered into a new contract with Island Offshore for the construction of one advanced offshore support vessel. The value of the contract amounts to approximately NOK 400m and delivery is scheduled in Q3-2014.

Intraco is making a mandatory offer for Dynamic Colours at S$0.185 per share. Dynamic Colours, listed on SGX, is principally engaged in the business of colour compounding and modified compounding of resins, which are used in the manufacture of external casings or component parts of electrical appliances and electronic devices. The offer price represents a premium of approximately 20.1% over the last transacted price of Dynamic Colours on 2 May 2013.

Renewable Energy Asia Group is placing out 108m new shares at S$0.050 per share. The subscription price represents a discount of approximately 3.85% to the last weighted average price. The net proceed of about S$5.35m is expected to be used for investment in new solar power plant projects and for working capital purposes.

Leader Environmental Technologies is expected to report a small loss for 1Q13 as compared with the corresponding period in 2012 due to the harsh winter conditions which prevented the Group from completing the remaining work-in-progress relating to desulphurization and industrial wastewater contracts. The Group has also been more selective and only undertakes those projects which offered better payment terms and/or gross profit margin.

Metech Internationalwill be reporting q-o-q and y-o-y profit growth. For the first three quarters in FY2013, the Group has realised a cumulative profit as oppose to a loss for the same period in FY2012.

PSL Holdings is expected to report a loss for 1Q 2013 as the first quarter results of the Group are traditionally weaker and coupled with stiffer competition.

Food Junction Holdings is expected to report a loss for 1Q13 as some new restaurants require further fine tuning and marketing initiatives to roll out.

Source: DBSV

Sembcorp Marine (S51)

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