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

MIDAS --> Maybank Kim Eng: The newly formed China Railway Corporation (spun off from former Ministry of Railways) made its capital market debut with the sale of Rmb20bn bonds last Thursday. The proceeds from the bond sales will go towards rail construction, the purchase of rolling stocks and working capital. In our view, it is a necessary move to get China’s ambitious railway plans back in gear and could potentially result in more intensive investments in the second half of this year. We continue to like Midas as a major beneficiary of the investments in China railway sector. Maintain our BUY rating and target price of SGD0.75.

KEPPEL CORP --> CREDIT SUISSE: We visited the show gallery of Corals at Keppel Bay, a 366-unit 99-year leasehold condominium newly launched by Keppel last weekend. More than 100 units of the project have been sold, close to all the units launched in the initial phase.

We maintain our OUTPERFORM rating on Keppel and target
price of S$13.70, with the property business representing 19% of our SOTP valuation. This is based on Credit Suisse’s target price for Keppel Land (NEUTRAL, TP S$4.10) and our Keppel Bay RNAV estimate of S$0.13 per share.

TAT HONG --> CIMB : In its own unassuming fashion, Tat Hong has delivered yet another year of record revenue. The shift in focus towards its two rental divisions and outside Australia has paid off, as the group gears up to reward its shareholders with a higher dividend per share. 4QFY13/FY13 core profits were in line with our and consensus forecasts, forming 20%/98% of our full-year estimate. We have trimmed our FY14-16 forecasts for expense- related items. This lowers our target price ($1.83), which is still based on 11x CY14 P/E (5-year average forward P/E). But we reiterate Outperform with strong Asian/Aussie operations being the key catalyst.


CHINA ESSENCE --> Lim & Tan Securities: We maintain our avoid recommendation on China Essence (3.1 cents, up 0.1 cent) as the company’s full year to Mar ’13 loss widened from Rmb280mln to Rmb556mln causing its shareholders funds to half to Rmb541mln and its cash dwindled to only Rmb1.1mln versus debts of Rmb824mln. It is currently in default on their convertible loan repayment as well as interest and their debt with DBS bank.

KING WAN CORP --> OSM-DMG: KWAN posted FY13 results yesterday, beating expectations by 13% on a revenue surge, albeit with lower margins. Its order book of SGD167m provides 2.2 years of revenue visibility and should easily sustain the 1.5 cent core dividend. With the Thai sugar mill listing in July 2013, we expect a 1.5 cent special dividend in 2QFY14F. We raise our TP to SGD0.43 based on a 7% yield as we expect further yield compression.

UNITED ENVIROTECH --> DBS VICKERS: Higher contribution from EPC drags margins but growing Treatment
supports transformation to a recurring earnings model
• SOTP-based TP raised to S$0.97 on positive revision of Treatment capacity and tariffs
• Downgrade to HOLD on limited upside; acquisitions, contracts are re-rating catalysts

0528 GMT [Dow Jones] Barclays notes that markets concerns about the end of QE3 or the Fed 'tapering' with long-dated government bond yields spiking up has resulted in both high-yield credit and high-yield equities, in particular S-REITs, being sold off.

The house believes "the concern is premature and we do not expect the Fed to cut back its bond purchases until 2014 vs the market's expectation of 2H13." With that in mind, Barclays continues to believe that S-REITs' valuations are not expensive - still above normalised average yield spread with the office sector having bottomed. It prefers REITs that could grow faster even when interest rates gradually move up due to sustainable growth in the U.S. "We would accumulate on dips," it says noting that Keppel REIT (K71U.SG) and CapitaCommercial Trust (C61U.SG), both rated Overweight with respective S$1.70 and S$1.87 targets, are its top picks among S-REITs. Shares are down 1.0% at S$1.43 and down 0.3% at S$1.54, respectively.

HIAP HOE --> OSK-DMG: Following the completion of its integrated project at Zhongshan Park at Balestier Road earlier this month, Hiap Hoe (HH) yesterday announced the valuation ascribed by Collier International for the
commercial development, which was valued at SGD702m. The 4-star Ramada Singapore was valued at SGD 700,000 per key, while the 3-star Days Hotel was valued at SGD 650,000 per key. Recent transactions in the hotel sector includes the 99-year leasehold Park Hotel Clarke Quay, which sold for SGD900,000 per key, and Rendezvous Grand Hotel, which was sold to Far East Hospitality Trust for SGD727,000 per key with a 70-year lease.

In our valuation, we have ascribed SGD652m for Zhongshan Park, with an attributable value of SGD326m for HH’s 50% stake. The commencement of this development represents a milestone for the group, as the rental income and room revenue generated will provide a stream of stable, recurring income and reduced the group’s reliance on the more volatile property development business. We continue to like the stock for management’s execution track
record and discipline in land-banking. On the residential front, earnings will continue to be underpinned by progressive profit recognition from its lucrative
Waterscapes at Cavenagh, as well as sales from completed developments such as Skyline 360° at St Thomas and Treasures at Balmoral.

The stock remains highly attractive from a valuation standpoint, as the value of its Zhongshan Park’s stake is already equivalent to its market capitalization, with
the development business and the associated profit stream for free. We maintain our BUY rating on the stock with a TP of SGD0.79, based on 40% discount to RNAV to SGD1.32/share. (Goh Han Peng)