DBS Equity Research: Wired Daily 29 Feb 2016

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Publish date: Mon, 29 Feb 2016, 02:33 PM

ST Engineering - Steady dividend outlook; maintain BUY, TP of S$3.40

China Merchants Hldgs - Consistent and attractive dividend yields; maintain BUY, TP of S$1.25

ST Engineering'sFY15 net profit of S$529m was within our expectations, and largely flattish y-o-y. Group revenues were down 3.1% y-o-y from S$6.54bn to S$6.33bn, largely a result of lower Marine segment revenues. Electronics division was the star performer as far as revenues were concerned, with an 8% increase. Overall pretax profit (PBT) margin for the Group remained stable at 10%. Management expects higher revenues and comparable PBT in FY16 with respect to FY15. Orderbook remains healthy at S$11.7bn; Smart nation projects will be a growth driver. Dividend yield is attractive at 5.3%. Maintain BUY with lower TP of S$3.40 (Prev $3.60).

FY15 net profit for China Merchants Hldgs (Pacific) of HK$597m below expectations, but final dividend of 3.5 Scts was intact. We expect the recently acquired roads and modest organic growth to drive earnings expansion of 20% in FY16. We project annual dividend of 7 Scts to be maintained for FY16F and FY17F. Maintain BUY, TP of S$1.25; stock offers 9% yield.

4Q15/ FY15 results for Thai Beverage within expectations. Final DPS of THB0.45 proposed; equates to 68% payout ratio on core profits. Amongst its business segments, Beer showed the strongest growth (+22.5% y-o-y). Spirits remains as its largest revenue contributor (62% of group revenue) while registering a growth of 1.3%. Reiterate BUY; TP: S$0.82.

Noble Group's4Q15 core loss of S$48.1m below expectations, hit by losses in Mining & Metals and logistics business. Maintain HOLD call with lower TP of S$0.32. To overcome investor concerns, we believe the following initiatives may help to re-rate Noble. These include: (1) a partial or full sale of its associates and/or Level 3 assets at or above stated book value to demonstrate the value of these assets; and (2) strategic investor in Noble itself or one of its divisions to provide reassurance over its business model. However, ultimately Noble has to demonstrate a sustained improvement in its free cash flow generation and earnings growth to support any re-rating.

FY15 results for City Developments flat y-o-y but above expectations due to gains from disposals to PPS2. Weak performance from all divisions. Singapore residential market remains weak; overseas market is progressing well with new launches in 2016 onwards. Despite the soft sentiment in the residential market, we believe that most of the negative news has been priced in and we see attractive valuations at 0.7x P/Bk which is below the GFC low of 0.83x. Maintain BUY, TP: S$10.26.

Swiberhas secured a contract worth about US$100m to provide engineering, procurement, installation and construction services for a National Oil Company (NOC) in South Asia. This latest project, which includes pipelines and subsea installation works, commences immediately and is expected to be completed in the first half of 2017.

The Singapore Exchange (SGX) is consulting the public on plans to impose a 10% minimum for the public tranche of mainboard initial public offerings, a higher hurdle than it had earlier proposed. SGX first proposed a minimum public allocation in an October 2012 public consultation. At that time, the exchange proposed that at least 5% of shares offered in a mainboard IPO must be available the public for subscription as opposed to being allocated via placement agents.

Source: DBS

ST Engineering (S63)ThaiBev (Y92)CityDev (C09)Swiber (BGK)

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