Buy, Sell, Hold....What analysts say

Goldman Sachs: QE tapering fears have sparked a corrective phase for Asian regional equity markets,
which have fallen over 11% from early May highs. Barring significant erosion in the growth outlook, we gauge downside risk to be around 5%-8%, and view this selloff as
an opportunity to build positions. The recovery, however, is likely to be more muted than is typically the case because markets need evidence of improving growth and
this will take some time. We focus on Korea, banks vs. defensives, and stocks that tend to fare well during rising rate environments.

NAM CHEONG --> OSK-DMG :

All fundamentals are in place. Nam Cheong’s fundamentals are rock-solid, with:

i) a net orderbook of MYR1.3bn, equivalent to 13 months of shipbuilding work, which enhances its revenue visibility as it sells more vessels;

ii) a balance sheet with 0.25x net gearing, offering ample room for growth;

iii) strong cash flow; and iv) FY13F ROEs/ROICs of 25%/21%.

The overly-conservative street estimate only assumes 20% growth, while we view the stock’s current 7.7x forward P/E as a low price to pay for 33% growth. As the stock has pulled back by some 10% from its recent peak, we see an attractive entry point before the street starts to upgrade.

Maintain BUY, with SGD0.35 TP, based on 10x FY13F EPS.

ST Engineering ---> OSK-DMG:

STE has been sold down recently, with its share price declining 10% since
late April following the selldown of dividend plays such as S-REITs, whose unit
prices retreated by 16% over the same period. We think this presents an
attractive opportunity for investors to accumulate STE shares. Compared to SREITs which perpetually rely on bank loans and are hence susceptible to rising
interest rates, we believe investors will favor STE as it is a defensive dividend play that will not be significantly impacted by an increase in interest rates,
thanks to its net cash hoard.

We expect STE’s share price to re-rate in the upcoming quarters as investors switch from S-REITs to industrials such as STE, which is also seen as a yieldpaying defensive stock. Our TP of SGD4.70 implies a FY13 yield of 4.4% and
potential share price upside of 14.0%.

All-time high orderbook enhances visibility for topline growth. STE’s orderbook
grew at a 10-year CAGR of 11.3% from 2003 to 2012 and is showing no signs of stopping. As of end-March this year, its orderbook hit an all-time high of SGD13.0bn (vs SGD12.1bn as at end-2012), giving it a book-to-bill ratio of 1.9. Bolstered by its strong orderbook trend, we project STE’s topline to grow by 4.2% from 2013 to 2017.

MIDAS --> OCBC:

Maintain BUY, but delay in high-speed tenders poses risks
We keep our forecasts intact for now, and reiterate our BUY rating and S$0.54 fair value estimate on Midas, pegged to 1.1x FY13F P/B. While there is optimism that the highly anticipated new high-speed railway
train car tenders by CRC may happen in 3Q13, the time frame remains
uncertain and any further delays would pose downside risks to ours and
the street’s estimates, as Midas’ manufacturing lines remain underutilised

ROXY-PACIFIC ---> OCBC:

ROXY announced that it has acquired, for RM470k, a 47%
stake in Macly Equity Sdn Bhd (Macly) which owns a 70k sq
ft land site in Kuala Lumpur, Malaysia at Jalan Dewan
Sultan Sulaiman. We understand this land site was acquired
for RM89.8m by Macly and that ROXY is finalizing a JV
agreement whereby it would likely fund the remaining
commitment via a shareholder loan with the site valued at
cost. This site has a total GFA of 686k sq ft and is
strategically located beside the upcoming Quill City (a 7-
acre mixed development on Jalan Sultan Ismail), the
Sheraton Imperial Hotel and monorail Stations to Bukit
Bintang.

From our calculations, this acquisition would likely accrete 2.4 S-cents to ROXY’s RNAV. Maintain BUY with a higher fair value of S$0.76 (30% RNAV disc.) from this acquisition, versus S$0.74 previously.

OUE ----> Morgan Stanley:


OUE Hospitality REIT (comprising OUE’s Mandarin assets) has lodged its planned listing prospectus with MAS. According to the prospectus, OUE has retained its minimum price to sell the assets to the REIT at S$1.705bn, but appears to have downsized the free float; we suspect this is due to adverse market conditions.

The prospectus indicates
that the sponsor, OUE, will retain a 48% stake in the
REIT (or 626.8mn units). This compares to OUE’s
earlier target – implied in its circular dated July 7, 2013 –
of retaining a closer to a 30% equity stake (assuming
similar leverage at the REIT of S$530mn or so) in the
listed entity. The S$219mn lower cash proceeds could
affect the special dividend – we had previously
calculated up to US$305mn, but now this could be
closer to US$196mn.
What’s in the detail? The price of S$0.88-0.90 implies
a dividend yield of 7.0-7.2% based on the companies’
annualized guidance for 2013; this rises to 7.3-7.5% in
2014. CDL-HT is now trading at 6.4%, with fewer
concerns over remaining land leases on its key assets;
retail REITs are trading closer to 5.6%.