DBSV S'pore Wired Daily 10 May 2013

kiasutrader

Publish date: Fri, 10 May 2013, 10:40 AM

Today's Focus

Kreuz - Still cheap at just 6x FY13F PE despite strong run. Maintain BUY with higher TP of S$0.78

1Q13 earnings for Kreuz Holdings in line; the group is on track for another growth year. Prudent balance between chasing growth and pace of adding assets should reap benefits over the cycle. Kreuz is still cheap at just 6x FY13F PE despite strong run. Maintain BUY with a higher TP of S$0.78 (Prev S$ 0.58).

Ezion's 1Q13 results slightly ahead, recurring net profit doubled y-o-y on 79% topline growth and firm margins. Addition of 3 service rigs and maiden contribution from GLNG will drive growth in 2Q. Our analyst expects further fleet expansion, supported by sound financials and strengthening cash flow. Maintain BUY; TP S$2.47.

Hyflux's 1Q13 slightly under, formed 12% of FY13F. Revenue fell short but margins held firm. Project execution is on track, pipeline awaiting conclusion. Positive industry trend bodes well for Hyflux but near term performance may be slow as orderbook is depleting. Maintain forecast; HOLD and TP unchanged at S$1.43.

StarHub's 1Q13 earnings of S$91.2m (+3% y-o-y, +4% q-o-q) were in line; comprised 24% of our FY13F earnings. Mobile revenue was weak but impact was offset by lower handset subsidies and higher grants. Dividend yield of 4.2% and mid-single digit growth prospects are priced in; maintain HOLD and S$4.30 TP.

Sin Heng registered revenue of $40.3m (+51.2% y-o-y) for 3Q FY13 and $124.6m (+37.8% y-o-y) for 9M FY13. The increase in total revenue was due to increase in both rental and trading revenues. Gross profit of $7.2m for 3Q FY13 was 67.0% higher y-o-y while total gross profit of $21.6m for 9M FY13 which was 61.7% higher than the prior 9M FY12. Gross margin improved to 17.3% for 9M FY13 from 15.8% in FY12. 3Q13 net profit doubled to S$3.1m while 9MFY13 was up 67% to S$9.4m. Chartwise, it's been based out at 0.245. Looking ahead, the company is cautiously optimistic that the key markets it operates remain encouraging. Technically, the stock has been trading in a narrow band from 0.23-0.26 since early March. It looks to have based out at $0.24-0.245. Scope for an initial move to $0.265, a rise above this is needed to lift the stock to $0.285.

Cosco announced that it will dissolve the Lianyungang yard, which is a 60% owned subsidiary of Cosco's 51% owned subsidiary Cosco Shipyard Group. The decision was made in light of the disagreement of one of the landlord to renew the lease, as well as losses suffered by the yard due to slumping ship repair market. Lianyungang yard is a small repair yard contributing only S$4m a year and is barely profitable. As such, we do not expect significant impact to Cosco's bottomline. We view the close down of smaller Chinese yards positively. With only the top 20 yards getting orders since 2012, industry experts believe that 50% of existing yards in China are near the fringe of closing down. Massive yard closure is one of the indicators of industry bottoming out, in addition to shipping turnaround.

CNA Group has received a Letter of Intent (LOI) to be appointed as the main Engineering, Procurement and Construction (EPC) contractor for two projects in Thailand's real estate sector. The aggregate contract value of the two projects is approximately S$63.6m. The two projects which mark the Group's first foray into Thailand's real estate sector are on the back of its collaboration with Thailand real estate agent and financial consultancy, West East International.

In property news, developers seem to be still upbeat about the executive condominium (EC) market, after the first such plot put up for tender since changes were introduced to this property class in January drew healthy demand. Seven parties bid for the 99-year leasehold site between Woodlands Avenue 5 and 6, provisional results from the HDB showed. The plot can yield about 590 homes. The top offer of $216m, or about $341.21 psf ppr, came from Qingjian Realty (South Pacific) Group. If the plot is awarded to Qingjian, the sale price will be 13% higher than the $302 psf ppr fetched last October for the nearby Twin Fountains EC site, and 7% higher than the $318 psf ppr for the also nearby Forestville EC site which closed last May.

Source: DBSV

Ezion (5ME)Hyflux (600)StarHub (CC3)COSCO SHP SG (F83)

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