DBS Equity Research: Wired Daily 26 Feb 2016

kiasutrader

Publish date: Fri, 26 Feb 2016, 04:59 PM

CSE Global - Weak order wins; maintain HOLD with lower TP of S$0.46

Pacific Radiance - Outlook remains bleak; downgrade to FULLY VALUED, TP cut to S$0.25

CSE Global's4Q15 net profit of S$8.1m (-22% y-o-y,-5% qo-q) was c.5% higher than expectations. Project completions helped boost bottom line. Order book (-24% y-o-y) under pressure due to the lack of large greenfield project wins. Maintain HOLD with a revised TP of S$0.46 (Prev S$0.49).

Pacific Radiancereported net loss of US$2.6m reported for 4Q15. Both the OSV and subsea segments were in a gross loss position in 4Q15, and we do not see any signs of a significant improvement in 2016, as oil prices remain low and demand for OSVs remain muted. Management expects FY16 to remain a difficult year. Downgrade to FULLY VALUED, TP cut to S$0.25 (Prev S$0.32).

4Q15 headline earnings for IHH Healthcare were aided by exceptional items. Core earnings fell 11% on interest and start-up costs. We expect earnings growth to moderate slightly in FY16F. Long term prospects already reflected in share price on premium valuation at 51.2x FY16F earnings. Maintain HOLD, TP revised to RM6.33/ S$2.09.

Riverstone's FY15 earnings of RM126.5m were within expectations. 1st production line of Phase 3 expansion is likely to be commissioned in June/July 2015. DPS of 6.45 sen was declared for FY15. We revise FY16F/17F earnings by -2%/+3% on lower USD/MYR forecasts, and as we revise target valuation multiple from 20x to 18x blended FY16/17 PE as the sector has de-rated. Maintain BUY; TP lowered to S$1.30 (Prev S$1.41).

4Q15 earnings for First Resources (FR) below our/consensus expectations. Final DPS of 1.25 Scts was declared. FR guides for 0 to -5% drop in FFB output this year as impact from El Nino takes a bite. FY16F/17F earnings cut by 11%/10%; TP lowered to S$1.85. HOLD call maintained.

Noble Group has plunged into the red for 2015, recording its first annual loss in almost two decades of US$1.67 bn as the weight of impairment charge bore down on the firm. Noble's revenue dropped 22% to US$66.7 bn for 2015, despite higher trading volumes of 271.3 million tonnes, up from 215 million tonnes.

With the recent weakness of GBP, there have been concerns that this will have a significant impact on ComfortDelGro, given its presence in the United Kingdom. UK accounts for 25%/20% of group revenue/operating profit, but the estimated contribution at net profit level is lower. A 10% depreciation in GBP/SGD will shave c.1.8% off earnings. However, the impact is largely translational in nature. Maintain BUY and S$3.24 TP

The Singapore Land Transport Authority yesterday decided to award the next-generation road pricing system (ERP) tender to a consortium of NCS (the home grown IT services company and subsidiary of Singtel) and Mitsubishi Heavy Industries (MHI). They beat two other consortia to the project, for which development will start in 2Q16 and finish by 2020. NCS-MHI bid S$556m for the contract, while ST Electronics bid S$1.26bn for the same, and hence lost out. This news could cause some near term negative sentiment for ST Engineering. However, there are several other projects under the Smart Nation umbrella, including Smart Traffic

management systems, Smart Water management, Smart Waste management, Estate Energy management and Smart Healthcare systems where ST Engineering has existing track record and should be able to secure contracts in future.

Singapore Exchange (SGX) has submitted a non-binding bid to buy The Baltic Exchange. The Baltic Exchange provides market information on the maritime market, used by shipbrokers, owners and operators, traders, financiers and charterers.

In US, Dow jumped 1.29% to end at 16,697, helped by the 3% jump in oil prices. Higher oil prices reduced fears that banks could be hit by debt defaults. Also helping sentiment, orders for US durable goods rose more than expected in January as demand picked up across the board, offering some hope for the manufacturing sector.

Source: DBS

CSE Global (544)Pacific Radiance (T8V)IHH (Q0F)Riverstone (AP4)First Resources (EB5)ST Engineering (S63)SGX (S68)

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