Excerpts of recent analyst reports

AmFraser Research maintains 'buy' call & 85-c target for Kingsmen

Analyst: Sarah Wong

Kingsmen Creatives released an announcement last Friday pertaining to accounting irregularities ound in two subsidiaries—Kingsmen Beijing Co. Ltd (KBJ), a 92.2%-owned subsidiary, and Kingsmen Exhibits Pte. Ltd. (KE), a wholly-owned subsidiary of Kingsmen.

The net financial impact to Kingsmen Creatives is a loss of S$29,000 and S$1.46mil respectively.

Kingsmen has had a confident run in the past year but has stumbled slightly recently.

After a meet-up with management, we assess Kingsmen’s management integrity and operational soundness to be intact. In fact, we think the 7% share price correction last Friday now provides investors with a timely entry point.  Maintain BUY with fair value of S$0.85.

Our FV of Kingsmen now stands at S$0.85, an 8.5x FY13F EPS of 9.9c, a slight drop from S$0.87 after factoring in audit review expenses. We see earnings visibility ahead through its pipeline of store roll-out and themepark contracts over the next few years.

In addition, Kingsmen still offers a 5.5% yield based on last close. Investors should be buying into a Kingsmen that has a stronger internal control and governance culture after this incident, as they continue to grow in the region and outgrow their growing pains.

DBS Vickers highlights stocks to benefit from public sector projects

peklianguan_2Pek Lian Guan, CEO of Tiong Seng Holdings.
NextInsight file photo

The Building and Construction Authority (BCA) expects demand to hit $26-32 bn this year ($28.1bn for 2012) through a strong pipeline of public sector projects while private sector construction moderates.

Infrastructure spending will increase to cater to the larger population. We prefer resource providers to pure contractors. Our picks are Tat Hong, Pan United and Sin Heng.

Tiong Seng, a leading contractor, should also benefit from the trend of using prefabrication as a way to reduce construction time and cut cost in the drive to increase productivity.

One of Tiong Seng’s niche areas is its precasting services, where concrete is cast in a reusable mould or forms before putting together on the site of construction.

Its automated pre-fab hub is gaining acceptance industrywide in Singapore and should help the company better face labour/cost pressures felt within the construction industry.

Recent story: TIONG SENG HOLDINGS: Record $1.4 billion orderbook, highest among listed contractors

DBS Vickers identifies offshore & marine stocks to buy

Analyst: Jeremy Thia, CFA

Venkatraman Sheshashaye, CEO of Jaya Holdings.
Photo by Sim Kih

Oil services & equipment providers to outperform rigbuilders on recovering earnings, sustained growth, and improving earnings visibility.

The oil services & equipment providers under our coverage are still trading below their historical average P/BV of 1.6x, while earnings are projected to recover 29% y-o-y in FY13F, reversing FY12's decline.

We believe this would result in an expansion of ROEs and P/BV multiples, driving upside from current share price levels.

Recovering earnings (ASL, Ezra, Jaya), sustainable earnings growth (Ezion, Jaya), and steady contract wins (Ezion, Ezra) leading to improving earnings visibility are expected to be the key drivers of outperformance.

Recent story: JAYA HOLDINGS: Full steam ahead to expand charter fleet

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