DBS Equity Research: Wired Daily 28 Sep 2015

kiasutrader

Publish date: Tue, 29 Sep 2015, 11:02 AM

Vard Holdings - Secures contracts worth over US$100m. Further downside risk in earnings; maintain FULLY VALUED call with TP S$0.45

Sentiment continues to be affected by the slowdown in Asia, rising risk of a technical recession here in Singapore and the weak SGD against the USD. We keep our view for the STI to trek a downward bias to 2750, likely over the next 2-3 weeks, before support emerges. Investors are likely to remain cautious ahead of the October MAS policy meeting and the release of Singapore's 3Q GDP on 14 October. A negative reading signals a technical recession.

Vard Holdings has secured new contracts for the design and construction of two Offshore Subsea Construction Vessels (OSCV) for a new customer, Dubai-based Topaz Energy and Marine. Delivery in 3Q 2017 and 4Q 2017, the aggregate value of the two contracts exceeds US$100m (or approx. NOK850m). This is Vard's second contract announcement this year. First contract was secured in June, which we estimate to be worth around NOK400-500m. This brings YTD win to NOK 1.2-1.3bn, making up <30% of our FY15 expectation. We believe our new order win assumptions for Vard in FY15/16, which are NOK5bn and NOK7bn respectively, are vulnerable to downside risks. In light of further downside risk in earnings, we maintain our FULLY VALUED call with a target price of S$0.45.

IPS Securex Holdings announced that its controlling shareholder, IPS Technologies, will be completing the sale of 8.9m shares, representing approximately 5.5% of the issued share capital to certain institutional investors at the price of S$0.71 per share or for an aggregate consideration of S$6.3m. After the sale, IPS Technologies will continue to hold approximately 51.20% stake in IPS Securex.

CMC Infocomm was awarded two contracts that are worth approximately S$4m. These contracts were awarded from the Singapore telecommunications companies to carry out In-Building Coverage (IBC) projects and network migration for the upgrading and refurbishment in various parts of Singapore.

HLH Group launches its proprietary real estate development brand "CAMHOMES" to build the first Singapore style public housing homes in Cambodia. HLH Group is also the first Singapore company to venture into public housing projects for the mass market in the country.

Civmechas launched a new defence division and aims to work with the lead contractor appointed to design and build Australia's future submarine - a project worth up to A$50bn. Civmec hopes to be involved in fabrication, assembling and surface treatment of submarine modules.

Singapore's manufacturing output tumbled 7% y-o-y in August, exceeding the 5.3% decline the market had predicted. Month on month, the slip in factory output last month was a seasonally-adjusted 3.7%, which came after a 0.7% rise in July. Both electronics and pharmaceuticals output were weak in August, declining by 10.9% and 6.3% respectively; biomedical output dipped 2.2%. In fact, last month's drop in factory output also hit general manufacturing (down 2%) and precision engineering (down 9.2%).

The number of private homes that were sold above S$3m in the first seven months of this year increased 17.7% to 659 units from 560 in the same period last year. In contrast, the number of private homes sold at prices of up to S$3m is almost unchanged; the figure inched up 0.3% to 8,763 units in January-July 2015 from 8,736 in the same year-ago period, according to URA Realis data.

Source: DBS

Totm Tech (42F)Civmec (P9D)

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