DBSV S'pore Wired Daily 2 December 2013

kiasutrader

Publish date: Mon, 02 Dec 2013, 01:12 PM

Today's Focus

Ezion - Ample room for appreciation, reiterate conviction BUY with TP raised to S$3.30

We maintain our view for STI 3150 to hold intact in the current year-end lull with upside bias towards 3290 (13.9x

or average FY14F PE). Weighed down by the risk of rising current account deficits and political uncertainties, South East Asian equities have clearly underperformed their North East Asian counterparts in recent months. Political uncertain in Thailand deepens after protesters seeking to oust Thai Prime Minister Yingluck Shinawatra vowed to incite more unrest this week after clashes left 3 dead in Bangkok at the weekend and the Thai central bank warned the standoff was hurting the economy. The USDBaht exchange rate is currently at 32.273, higher by 0.7% compared to Friday.

Capital outflow from this region has weighed on Singapore equities. But Singapore remains a safe haven as the country has been enjoying current account surplus and economic growth is picking up. As a result, Singapore equities here have outperformed their neighbours.

We reiterate our conviction BUY on Ezion with TP raised to S$3.30 (Prev S$2.65) as we roll over valuation to FY14, still pegged to 14x PE. Trading at less than 9x FY14 and 7x FY15 PE, valuation for Ezion is undemanding against 42% 2-year EPS CAGR, which has strong visibility as 90/72% of FY14/15F revenue are backed by secured contracts. Ezion is a safer proxy to ride the growth prospects of its two associates - Ocean Sky and Charisma - which have yet to deliver. We estimate that the two associates could add approx. S$390m or 32 Scents to Ezion's share price (our TP reflects only 1.5 Scents). Ocean Sky will take time to ramp up Port Melville while we await greater clarity on Charisma's strategy and financials.

Centurion acquires RMIT Village in Australia, expanding its business scope and regional presence. This acquisition will be immediately earnings accretive in FY14, adding S$3.5m to pre tax profit on a 9M YTD basis or a 9% return on investment. However, we believe the extent of accretion is contingent on the interest costs of the funding structure. Maintain Buy, TP unchanged at S$0.77.

Vard Holdings has secured 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. The vessel is scheduled for

delivery from Vard Brevik in Norway in 1Q 2015.

Keppel Corp is currently negotiating conversion and liquefaction contracts with Golar LNG on the conversion of

an existing LNG carrier into a Floating Storage and Liquefaction Vessel (FLSV). The terms and conditions of the

contracts, including the contract value and expected completion timeline, have yet to be finalised.

GSH Corporation has signed an agreement to acquire a prime land parcel for RM132.4m. The leasehold land parcel of 5,800 sq metres, - which GSH plans to develop into a residential and commercial development, is located on Jalan Kia Peng in the prime section of Kuala Lumpur's city centre, popularly known as the Golden Triangle.

ST Engineering announced that its electronics arm, ST Electronics has set up a wholly owned subsidiary, ST

Electronics (Tianjin) in Tianjin Eco-City, China with a paid up capital of RMB 10m (about S$1.97m). ST Electronics Tianjin is wholly owned by ST Electronics (Shanghai) Co., Ltd, a wholly owned subsidiary of ST Electronics. Separately, ST Engineering announced that it has streamlined its US entities, by merging Vision Technologies Systems, Inc., with VT Systems, Inc., through a short-form merger. VT Systems, Inc. will be liquidated as of 30 November 2013 and all its assets and personnel will be transferred to Vision Technologies Systems, Inc. Business will continue seamlessly. Vision Technologies Systems, Inc., which has been operating as ST Engineering's US headquarters, will continue to leverage the global capabilities of the Group to expand and grow in the US market.

Wing Tai Holdings has been awarded the tender for a leasehold land parcel Plot 17/2, Huai Hai Middle Road

Precinct No. 45 in Shanghai Huangpu District having an approximate site area of 8,593.9 square metres at the price of RMB1.104bn.

Innopac Holdings has moved into China's natural gas market, after a false start in 2011. It will pay $17.1m for

81.82% stake in Shandong CNG firm. Part of the purchase consideration at $7.2m will be in cash; the balance of $9.9m will be met through the issuance of 300m new shares in Innopac at an issue price of 3.3 cents per share.

Business loans continued to power Singapore's bank lending growth in October, with total loans rising 1.4% over the month from 1.1% in September. On a year-on-year basis, however, credit growth slowed slightly, increasing 15.6% to $554.3 bn last month, compared to 15.7% in September. Loans to businesses grew 2% in October to $332.1 bn, after rising 1.4% in September. Year-on-year growth picked up as well to 19.4% in October, faster than the 18.6% seen in the month before.

Business lending momentum was largely driven by the general commerce, and transport, storage and communication sectors. In year-on-year terms, loans growth for the former continued to rise at a rapid clip of 28.8% in October; the latter grew 26%. In contrast, on a year-on-year basis, consumer loans growth slowed to 10.4%, from September's 11.7%. Over the month, consumer loans grew at the same pace of 0.6% in October as they did in September, to reach $222.2 bn.

Singapore is targeting to welcome 1.5 million cruise passengers by 2015, up from the 913,000 that sailed into

the island last year, as it sets its sights on winning a sizable slice of the rapidly growing Asian cruise industry. The

Singapore Tourism Board (STB) believes it is able to hit these numbers as the sector in Singapore and the region is still in a nascent stage and has strong growth potential, especially if it is able to attract more international cruise passengers here.

JTC Corporation has launched four industrial sites zoned for Business-2 development, in Woodlands Industrial Park E9 and Tuas South, for sale by public tender. The Land Transport Authority (LTA) has awarded two civil

contracts for the building of the MRT's Woodlands North and Napier stations and their associated tunnels. The

contracts for these Thomson Line stations are worth $526m. Woodlands North station goes to Penta-Ocean while Napier station goes to Sinohydro.

Chinese manufacturing grew more than expected in November, indicating that the nation's economic recovery is sustaining momentum amid government efforts to rein in credit growth. The Purchasing Managers' Index was 51.4. That's the same reading as October, which was an 18-month high, and exceeded 24 out of 26 estimates in a Bloomberg News survey.

Source: DBSV

Ezion (5ME)Centurion (OU8)Keppel Corp (BN4)ST Engineering (S63)Wing Tai (W05)

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