DBS Equity Research: Wired Daily 26 Feb 2015

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Publish date: Fri, 27 Feb 2015, 02:29 PM

Sheng Siong Group - FY14 results in line, on track for growth. Maintain BUY, TP S$0.83

Sheng Siong Group's (SSG) FY14 results in line, driven by 3.3% same store sales growth (SSSG) and higher gross margin. Final DPS of 1.5 Scts declared, bringing total DPS for FY14 to 3 Scts, or 92% payout ratio. We believe SSG will deliver higher margins as fresh products sales mix improves over time. Having opened two new stores since December 2014, SSG is also on track to meet our target of four new stores in FY15F. Longerterm growth opportunities lie in China. We expect the first store to commence operations in 2H15 with breakeven anticipated after FY15F. Maintain BUY, target price S$0.83 (Prev S$ 0.82).

StarHub's 4Q14 net profit of S$ 94.2m (+10% y-o-y, -4% q-oq) was broadly in line. Service revenue remains weak on lower broadband revenue. Lower traffic costs offset weak revenue and higher handset subsidies. We have trimmed our FY15 and FY16 net profit forecasts by 3% and 5%, respectively, due to concerns in the broadband and Pay TV segments. Maintain HOLD with revised TP of S$ 4.35 (Prev S$4.30). We revised up

our TP to S$ 4.35 as we roll forward our discounted cash flow based valuation.

Newswire reported that Indonesia's Ministry of ESDM will apply a new biodiesel pricing formula effective 1 Mar15 (subject to approval). The new formula will be based on the price of Crude Palm Oil (CPO), instead of Mean of Platts of Singapore (MOPS) under the previous pricing formula. The policy change is a positive for palm oil prices but implementation is key. Notwithstanding possible delays in implementing the new biodiesel policy, we expect palm oil prices to recover meaningfully by the end of this year; as lagged impact from 2014 dry weather takes effect on FFB yields. We continue to recommend young upstream planters such as Bumitama for SGX-listed planters.

C&G Environmental Protection Holdings has recently been awarded a sales contract of Sludge Dewatering System Procurement of the fourth sewage treatment plant expansion project in Xi'an with a contract sum of approximately RMB37m.

Moya Holdings Asia proposed to issue 367.5m new shares, representing 29% of the enlarged issued share capital, at an issue price of S$0.08 per share. The issue price represents a premium of approximately 199.6% to the last volume weighted average price. The subscriber is part of an Indonesian-based group which is presently principally engaged in the investment, development, construction and operation of hydroelectric power plants. The net proceeds of S$29.3m will be mainly used for funding the capital expenditure requirements relating to its current projects in Indonesia which involve designing, building, upgrading and operating of bulk water supply and water supply concessions.

Growth in Singapore households' net worth continued to moderate last year as the rise in the value of their financial assets slowed and the aggregate value of residential properties on their balance sheet dipped despite the higher number of dwelling units. Data released showed a 2.3% rise in households' net worth (assets less liabilities) from a year ago to S$1.47 trillion at the end of 2014, easing from a 4.2% rise in 2013 and 8.2% growth in 2012.

US indices finished little changed as Hewlett-Packard Co. and Apple Inc. led technology companies lower. Energy stocks rebounded after oil price rallied following comments by Saudi Arabian Oil Minister that oil demand is growing and the market has turned "calm." A government report showed US crude supplies climbed last week to extend their record as refineries reduced operating rates and fuel supplies slipped.

Source: DBS

Sheng Siong (OV8)StarHub (CC3)Bumitama Agri (P8Z)Moya Asia (5WE)

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