DBS Equity Research: Wired Daily 17 Feb 2015

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Publish date: Tue, 17 Feb 2015, 10:14 PM

Yangzijiang - Breaking into the LNG carrier market. Maintain BUY and S$1.62 TP

Ezion - The most resilient O&G play. Reiterate BUY; TP adjusted to S$1.58

Yangzijiang has secured its first order for LNG carriers. This is amajor breakthrough that paves the way for Yangzijiang's foray into this market. The contract, from new customer JHW Engineering & Contracting Limited (JHW), a subsidiary of JACCAR Holdings that owns EVERGAS, a world leader in ethylene and ethane gas transportation, is to build two 27,500CBM Liquefied Natural Gas (LNG) carriers for US$135m. Maintain BUY and S$1.62 TP. Yangzijiang is the best proxy to the shipping and shipbuilding recovery.

Ezion's FY14 results in line; recurring net profit up 34% y-o-y. There are no cancellations and written requests for contract renegotiations thus far. Management guided for moderate expansion at a slower pace than last year (10 new contracts) to manage its gearing level. We trim FY15 EPS by 6%, adjusting for revision in delivery schedule. Reiterate BUY; TP adjusted to S$1.58 (Prev S$ 1.60). Ezion is our top pick in the O&G sector Ezion is more resilient to near-term oil price weakness on the back of long-term charter contract of 3-5 years and relatively better outlook for liftboats in Asia Pacific.

City Developmentreported 4Q14 net profit of S$384.9m, a new record. The group declared 4scts/ share special dividend on top of a final dividend of 8 Scts. Total dividends paid in 2014 is 16 Scts, in line with 2013. City Dev is one of the top selling developers in 2014 with S$1.4bn in new sales (1,378 units). Its South Beach project is expected to complete in 2015, and contribute positively from 2015 onwards. Maintain BUY, TP raised to S$11.54 (Prev S$ 10.71).

ARA Asset Management's 4Q14 earnings in line. ARA's asset under management (AUM) increased to approximately S$26.3bn as of end Dec-14, implying AUM growth of approximately S$2bn during the year, in line with management's guidance. ADF Fund 3 should kick start from 1H15; targeting S$2bn in AUM per annum. Maintain BUY, TP S$1.85.

2Q15 core net profit for Olam was hit by currency volatility. The Food Staples division was the main division affected by the currency volatility. We have cut FY15-17F core net profit by 20-26%. We see limited near term re-rating catalyst due to drag on FY15F earnings and delay in hitting FCF targets Downgrade to HOLD, TP lowered to S$2.20 (Prev S$ 3.15).

4Q14 and FY14F earnings for Raffles Medical below expectations, dragged by higher contracted services cost. Expansion is on track. We expect patient volume growth to improve as a result of the expansion. FY15F/FY16F earnings were reduced by 6%/8%. Maintain HOLD but TP lowered to S$3.96 (Prev S$ 4.19).

3Q15 core earnings for Tat Hong below expectations as margins disappointed. Anticipated recovery of Australia business remains slow. Maintain HOLD with S$0.82 TP, look to upgrade when Australia operations display more significant signs of recovery.

CWTreported FY14 results that were slightly below our expectations with net earnings +6% yoy to S$112.4m vs our forecast of S$118.9m, mainly due to a weak 4Q14 (-67% yoy to S$14.7m), where we believe their naphtha trading business (seasonally strong in 4Q) would have been affected by the slump in oil prices. Maintain BUY, with TP of S$2.08 under review.

Hor Kew Corporation will record a loss for FY14 as compared with a profit for FY13, due to the following reasons:-

(i) Lower revenue recorded;

(ii) Rising material costs, labour costs and overheads; and

(iii) Currency fluctuations.

Global Logistic Properties has signed new lease agreements totaling 61,000 sqm) (657,000 sq ft) with four customers, including three leading third-party logistics companies ("3PL") and one of the largest e-commerce companies in China. All of them are multi-location customers of GLP and are utilizing the facilities to serve domestic consumption.

KSH Holdings has won a S$78.2m construction contract for the construction of the proposed 11-storey Singapore Chinese Cultural Centre at Shenton Way. The award of this new contract has lifted KSH's order book to over S$414m.

800 Super Holdings has been awarded a sizable contract from the Singapore Government to provide cleaning and horticultural services for the east and west regions of Singapore at an aggregate contract value of approximately S$38.6m.

YuuZoohas acquired Singapore-based gaming company IAHGames for about S$18m in an all-share deal. The issuance was of 50m YuuZoo shares at S$1 apiece, representing an almost 178% premium over YuuZoo's last traded price (before the deal).

Singapore's 4Q GDP grew 2.1% y-o-y, better than consensus estimates of 1.7% as a strengthening U.S. recovery boosted demand for the island's exports. Q4's performance brought full-year growth for 2014 to 2.9%, slightly above the government's January estimate of 2.8%. The manufacturing sector contracted 1.3% y-o-y, down from the 1.7% growth in Q3. Growth in the services sector slowed to 3.1% y-o-y in Q4, down from 3.3% in Q3. The Singapore government maintained its 2015 full-year growth forecast of 2-4%.

January electronics exports and NODX also came in betterthan-expected at 5% y-o-y (consensus +0.1%) and 4.3% yo-y (consensus +2%) respectively. Month on month, the NODX grew a seasonally-adjusted 1.6% after a 0.2% dip in December. Except for Indonesia and Japan, shipments to all top 10 markets rose in January. The EU, Hong Kong and Japan were the top three contributors to the growth in January.

Singapore developers sold 372 private homes in January, a 62% improvement from the 230 units sold in the traditionally lull December period. But the increase was largely a function of greater supply, with Marine Blue at Marine Parade and Symphony Suites at Yishun making up the bulk of the launches. Last month's sales figure remained a 35% drop from the 572 units moved in January 2014. It also fell far short of the 12-month sales average of 630 units, as cooling measures and loan curbs continue to cap demand.

Source: DBS

YZJ Shipbldg SGD (BS6)Ezion (5ME)CityDev (C09)Olam Intl (O32)KSH (ER0)YuuZoo Networks (AFC)

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