DBS Equity Research: Wired Daily 21 May 2015

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Publish date: Thu, 21 May 2015, 04:11 PM

ASEAN Small Mid Caps Radar - We highlight three SGX-listed companies: Ying Li, Hock Lian Seng and mm2 Asia

We highlight three SGX-listed companies in our monthly ASEAN Small Mid Caps Radar: 1) Ying Li International Real Estate - a Chongqing-based real estate developer, has entered into a strategic partnership with China Everbright Limited (CEL), one of China's largest SOEs. Ying Li is looking to expand further into other Tier 1 and Tier 2 cities in China. This tie-up could trigger a significant transformation and accelerate growth for Ying Li. 2) Hock Lian Seng Holdings - one of the biggest civil engineering companies in Singapore with over 45 years of proven track record. Its key projects include Marina Coastal Expressway, MRT stations, and airport infrastructure. The Group has a strong balance sheet. Net cash stands at S$173.3m as at end-1Q15 or about 84% of its current market capitalisation. 3) mm2 Asia - a producer of movies and TV/online content. Notable local productions include 'Ah Boys to Men'. mm2's earnings are poised to grow on the back of its orderbook of 18 production titles, including some big productions, and at least six distribution rights until April 2016. In addition, revenues from its blockbuster 'Ah Boys to Men III' are yet to be fully recognised.

Subsequent to its clarification release, Ezion hosted an analyst briefing to address the dispute with partner Atlantic Marine Services BV (AMS). Key takeaways: Allegation #1: Inflated charter rates. "Inflated" bareboat charter rates to Ezion are compensations for the incremental capex incurred.

Allegation #2: Alleged options for AMS to acquire a 50% stake in each of two rigs. The alleged options were voided following AMS's inability to meet its obligations. We continue to give Ezion the benefit of doubt. The stock has fallen 12% within a week. Maintain BUY and TP of S$1.50 (8x FY15 PE).

Armarda Group is expected to record a loss for FY15, mainly attributed by low sales, impairment of intangible assets and share of loss of the associates.

Federal Reserve policy makers viewed an interest rate increase in June as unlikely and worried about the outlook for the economy, minutes from their April meeting showed. "Many participants" at the meeting "thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, although they generally did not rule out this possibility," the minutes of the meeting said. Generally, the April minutes reflected a "waitand-see" attitude after a stall in US economic growth in the first quarter.

Source: DBS

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