DBS Equity Research: Wired Daily 20 Nov 2015

kiasutrader

Publish date: Sat, 21 Nov 2015, 10:24 AM

Mermaid Maritime - Strong results lifts confidence, Maintain Buy TP:$0.27

Mermaid Maritime's revenue for 3Q15 registered at US$96.6m, buoyed by the subsea segment. Operating margins on the subsea segment as a whole were robust, at ~24%. This bolstered profits to US$16.5m for the quarter despite a US$1.1m loss on the drilling segment. While the group's strong performance is encouraging, its orderbook has depleted to US$212m as of 3Q15, down from a high of US$473m at end- FY14. The group expects the orderbook to edge up over the next few months. Our TP is revised up slightly to S$0.27 (0.5x FY15F P/BV) as we raised FY15/16 earnings to reflect the stronger-than expected performance in 3Q15. The stock looks cheap from a P/BV viewpoint at current levels. Maintain our BUY call; catalysts should come from sustained profitability and positive news on the tender rigs.

According to the Business Times-UniSIM Business Climate Survey, companies here project that the economy would expand 0.5% at best or contract 1.4% at worst in the last three months of the year. Net balance of sales plummeted y-o-y by 61% in 3Q. This was mainly due to more companies registering poorer sales. Companies in the transport and communications sector were the worst hit, with sales dropping by 73%. The Q3 fall is the 17th straight quarterly drop, meaning that this is the longest stretch of sales contraction since the survey began in the fourth quarter of 1995. Profit-wise, respondents reported a net decrease of 55%. Commerce firms were hardest hit, with a fall of 70%. New orders for respondents fell by 57%. The fall was marked across all sectors, ranging from 54% for the construction sector, to 69% for commerce. Companies predicted that 4Q GDP will range from an expansion of about 0.5% to a contraction of 1.4%.

Frasers Hospitality, the hospitality arm of Frasers Centrepoint Limited, has opened its second serviced residence in Tianjin. The 192-unit Fraser Place Tianjin is adjacent to the Olympic Stadium Centre and close to the historical Nankai district. Its opening follows the launch of 104-unit Modena by Fraser Heping Tianjin in 2010, their 15th property in China. It hopes to double its footprint to 30 properties with over 7,000 serviced apartment units by 2019.

US stock indices ended mixed as the rebound stalled energy stocks dipped amid lower oil price. Energy companies in fell amid seesawing crude prices. Oil slid to its lowest in almost 3 months on signs of ample supplies.

Source: DBS

Mermaid Maritime (DU4)Frasers HTrust (ACV)

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