DBS Equity Research: Wired Daily 12 Dec 2014

kiasutrader

Publish date: Fri, 12 Dec 2014, 04:32 PM

PACC Offshore Services Holdings - Limited re-rating potential. Maintain HOLD with TP of S$0.58

Falcon Energy Group makes general offer for CH Offshore at S$0.495 per share

With Brent crude oil falling below US$70/bbl, we believe the medium term outlook has become more cloudy now, with several oil majors and rig owners cutting capex plans, reducing dividends and tightening opex. OSV owners could experience difficulties in securing new long term contracts, though the demand-supply situation is relatively much more benign than the last downturn in 2009-10. In its recent presentation to the management community, the management of PACC Offshore Services Holdings indicated that the Group (excluding JVs) has secured US$162m of charter contracts for FY15, which represents only about 0.7x historical book-to-bill, and hence, we believe does not inspire much confidence at this point.

The crucial contract for the 2nd SSAV has yet to materialise as well. Its Mexico plans are still unclear. Six of the Group's vessels in Mexico continue to be idled. No changes to our below consensus earnings estimates for FY15/16F, as we remain conservative on the commencement dates of the contracts for the two SSAVs in FY15 as well as potentially lower charter rates for the 2nd SSAV. Maintain HOLD with target price of S$0.58.

Falcon Energy Groupintends to make a voluntary conditional cash offer for all the issued and paid-up ordinary shares of CH Offshore (CHO). The offer price of S$0.495 for each share of CH Offshore represents a 6.45% premium over the last closing price. The general offer, if successful, will allow Falcon Energy Group to expand its marine division and increase fleet capabilities. CHO operates a fleet of 15 AHTS vessels and has a track record of over 30 years in providing marine support services to the oil and gas industry worldwide. The offeror currently owns 29.07% of the total number of issued CHO shares.

Global Logistic Properties has signed new agreements totaling 65,000 sqm (700,000 sq ft) with four industry leaders in six locations across China. All the new agreements are signed with existing customers. The facilities will be used to cater to growing domestic consumption, distributing consumer products sold online and in retail stores.

Logistics Holdings has secured a S$13.47m contract from the Ministry of Education (MOE). The contract involves the erection of a 6-storey classroom block and indoor sports hall. The latest contract win boosted the Group's order book to approximately S$370.3m, with projects expected to last until the financial year ending 30 June 2018 (FY2018).

TEE International was awarded approximately S$26m worth of contracts from repeat and new clients in Singapore, thereby achieving a total outstanding order book of about S$467m.

Hwa Hong Corporation has acquired a 70% stake in Capital Eagle Limited (CEL), a UK company whose principal activity is property investment. CEL had earlier acquired a freehold retail and commercial property in Holborn in central London for £24.6m. With this acquisition, the group now has investments in three key areas in London.

US stocks rebounded but still ended off session high as better-than-expected retail sales and unemployment data overshadowed a renewed selloff in oil. Retail sales for November rose 0.7%, better than the 0.5% the previous month. Weekly jobless claims fell 3,000 to 294k (consensus 294).

Source: DBS

Falcon Energy (5FL)Boldtek (5VI)TEE Intl (M1Z)Hwa Hong (H19)

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