Cosco Corp - Dragged by cost overruns; downgrade
to FULLY VALUED, TP cut to S$0.76
Sembcorp Marine – 3Q earnings below on weak
margins. Maintain HOLD and S$4.80 TP
UOB - Stable year ahead. Maintain HOLD, S$21.90 TP
3Q13 earnings for Cosco Corporation were below on
massive provision for cost overruns, the worst quarter
since 2008. Earnings disappointment and overhang from
drillship legal case may pressure share price. We have
slashed our below consensus FY13F/14F earnings by a
further 31%/23% to account for the provisions for cost
overruns. Downgrade to FULLY VALUED, TP cut to S$0.76
(Prev S$0.83). Short-term technical resistance at $0.78
with downside bias to $0.76 followed by S$0.71.
3Q net earnings for Sembcorp Marine were below despite
strong topline growth as operating margins declined
1.8ppts q-o-q to 10.0%. We have trimmed FY13E/14F net
earnings by 8%/7% as we have assumed lower EBIT
margins and lower assoc income. New orders on track;
order book stands at S$13.5bn. Re-rating catalysts could
come from margin recovery and strong order wins.
Maintain HOLD and S$4.80 TP.
3Q13 net profit for UOB largely in line with provisions
slightly lower than expected; one-off gains from AFS
securities lifted earnings. Stable NIM and loan growth as
expected; higher fixed deposit growth enhanced both
overall loan-to-deposit and S$ loan-to-deposit ratios. We
expect a stable year ahead. NIM is expected to remain
stable from here with possible upside over time. Loan
growth should end the year in the low-to-mid teens but at
a moderated pace in 2014. Regional growth remains in
focus. Maintain HOLD, S$21.90 TP.
SATS’ 2Q14 earnings slightly below, affected by Qantas’
rerouting, lower contribution from subsidiary and higher
staff costs. Interim DPS of 5 Scts in line with expectations.
SATS is still on track to meet our forecast, supported by
positive operating drivers. Maintain HOLD and S$3.29 TP.
US Indices Last Close Pts Chg % Chg
Dow Jones 15,618.2 (20.9) (0.1)
S&P 1,763.0 (5.0) (0.3)
NASDAQ 3,939.9 3.3 0.1
Regional Indices
ST Index 3,205.5 1.6 0.0
ST Small Cap 538.3 0.3 0.1
Hang Seng 23,039.0 (150.7) (0.6)
HSCEI 10,637.2 (48.9) (0.5)
HSCCI 4,512.0 (8.4) (0.2)
KLCI 1,807.5 (2.9) (0.2)
SET 1,415.4 27.0 1.9
JCI 4,423.3 (9.3) (0.2)
PCOMP 6,519.6 (23.8) (0.4)
KOSPI 2,013.9 (11.2) (0.6)
TWSE 8,262.2 (91.9) (1.1)
Nikkei 14,225.4 23.8 0.2
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 595
Total Daily Vol (m shrs) 2,312
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
5 Nov
Target Price
($)
ST Engineering Buy 4.180 4.80
ComfortDelgro Buy 1.910 2.19
OCBC Bank Buy 10.470 12.40
Singapore Airlines Buy 10.470 11.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
5 Nov
Target Price
($)
Ezion Holdings Buy 2.330 3.10
CSE Global Buy 0.915 1.07
Frasers Centrepoint Trust Buy 1.820 2.14
Yoma Strategic Holdings Buy 0.755 1.02
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
Broadway Industrial’s 3Q13 profits missed forecast; rightsizing
and year-end ramp up were not up to speed. Margins
were compressed. Broadway has met only 25% of our full
year estimates as of 9M13. A 2H rebound would be
challenging as HDD is expected to be flat for another year
while non-HDD is taking longer to cultivate and the group’s
move of right-sizing operations is moving slower than
desired. Our analyst has cut FY13/14F earnings by 44-49%.
Maintain Hold, TP cut to S$0.25 (Prev S$ 0.30) (0.5x P/BV).
Vard Holdings reported revenue of NOK 2.37bn and EBITDA
of NOK 103m for 3Q 2013. EBITDA margin of 4.4% still
weighed down by Brazil operations. Vard secured record
order intake of NOK 7.95 bn in 3Q 2013. Its new shipyard in
Brazil, Vard Promar, is ramping up production. Positive
outlook for new order wins for the remainder of 2013 and
going into 2014, notwithstanding a highly competitive
market.
Vard Holdings has signed a new contract for the construction
of a survey vessel for Circle Maritime Invest JSC (CMI). The
value is approximately NOK 55m. The vessel, to be built at
Vard Braila shipyard in Romania, will be delivered in 3Q 2014.
Sinotel Technologies is expected to record a net loss for
3QFY2013 and 9MFY2013. The expected loss was mainly
attributable to:
(i) the decrease in contribution from outdoor wireless
coverage solutions and emergency mobile communications
system (EMCS);
(ii) a potential impairment of plant and equipment of the
Group; and
(iii) potential allowance for doubtful trade receivables.
Delong Holdings expects to report a net loss for 3Q13,
mainly due to (i) impairment charges and provision made for
doubtful debts. Delong’s core business activities remained
profitable in 3Q2013.
Samko Timber expects to report a net loss for 3Q13, mainly
due to unrealised foreign exchange loss incurred and lower
gross profit margin achieved.
JES International has entered into an agreement to invest in
potential mining assets as it is acquiring up to 30% stake in
Mineriver for S$127.0m. Mineriver is in the process of
acquiring mineral exploration rights, and later the mining
rights, for metals and minerals (including Magnesium and
Nickel) in Xinjiang, China; and also to consider future listing
on a recognised stock exchange.
Singapore’s October PMI rose to 51.2 from 50.5 in
September. This signals a stronger-than-expected pick-up in
manufacturing activity, underpinned by further expansion in
new orders, new export orders and higher output. Electronics
manufacturers, whose output surged 20% in September,
also reported higher activity levels in the latest PMI survey.
The electronics PMI rose to 51 in October from 50.3 in
September. Sub-indices showed growth in both local and
foreign new orders, as well as higher output. Globally, the
latest PMIs for the US, Europe, China, Korea and Taiwan,
which have all shown expansion in manufacturing, bode well
for an export recovery too.
US markets fell but came off session lows ahead of the
release of advance 3Q GDP tomorrow and October
employment numbers on Friday. 3Q GDP is seen expanding
2%, down from 2.5% the previous quarter while non-farm
payrolls are expected to dip to 125k from 148k in September.
October’s ISM non-manufacturing index unexpectedly rose to
55.4 from 54.5 the prior month. Meanwhile, the EU trimmed
euro-area growth forecast next year. GDP is expected to rise
by 1.1% in 2014, less than the 1.2% forecasted earlier
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