Excerpts from analyst reports …..

Source: Kim Eng Securities report

Kim Eng Securities highlights Lum Chang’s $700m orderbook

Analyst – James Koh: We estimate Lum Chang to have a construction net orderbook of about $700m as at FY09 (June Yr End) of which $500m relates to MRT projects to be recognized over the next 5-6 years.

While the remaining $200m work relating to commercial and residential projects will be recognized over the next 12 months, management is optimistic that they can easily renew this orderbook, given their track record.

While the Group will reap some profits from the sale of its remaining four units of Swettenham Luxury Bungalows, we expect Malaysia to provide the excitement going forward. The Group has teamed up with a strong JV partner to develop 3 residential projects in Kuala Lumpur. In various stages of construction and launches, current market prices mean these will start yielding profits going forward.

Trading at book value: Even without taking into account the expected profitability over the next few years, the Group is currently only trading at 1X P/B. Under its assets, $20.6m is net cash, while another $39.5m is the cost value of the Swettenham Bungalows which is below market price at the moment.

We also note that all its trade and receivables are from government bodies/ blue-chip clients where we do not foresee any collection issues. The Group has paid steady dividend of at least 1 cent net per share since 1997. (1.5cents for FY09).

The report was issued following a company visit by James and has an unrated recommendation.

A flagship Erke sports gear boutique.

Credit Suisse: Lacklustre 2009 for China Hongxing due to weak demand

Analyst – Catherine Lim:
China Hongxing is a leading domestic sports brand in China, selling awide range of sports footwear, apparel and accessories under its brand Erke. Management expects a lacklustre 2009, due to weak demand and inventory issues.

The company plans to improve the situation by focusing on same-store sales. One of the strategies is to increase the store space (for fitting rooms) to cater for higher sales of sports apparel, which carry higher margins. Furthermore, Hongxing aims to expand its network and have 4,100 outlets by 2009 (+8%), 4,600 by 2010 (+12%) and 5,400 by 2011 (+17%).

In the long term, management targets to have advertising and promotion-to-sales ratio reduced to within 20% while sports apparel to account for 60% of sales. Management remains optimistic that Hongxing will continue to gain market share.

China Hongxing was among 3 companies which presented at the Credit Suisse’s
‘China Emerging Corporate Days’ held on 2-3 September 2009

DBS Vickers reduces target price of FSL Trust to 70 cts

Analyst -
Suvro Sarkar: While 3Q09 DPU (distribution per unit) guidance has been reconfirmed at 1.50UScts, we believe that the Trust should be able to distribute a minimum of 1.40UScts on the expanded share base, going forward, without accounting for acquisitions.

This implies a mere 7% dilution and brings FY10 yield down to 13.1% from 14.0% pre-placement (of 80 million units at 52.5 cents a unit), which is still attractive given the embedded growth option. Acquisitions, even at a conservative 12% asset yield, could potentially boost DPU by another 9% in FY10. Thus, we maintain BUY, TP slightly reduced to S$0.70 owing to near term dilution effects.

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