DBS Vickers Report

Today’s Focus
 Ezion - All indications point to a BUY, with 52% upside
potential to TP of S$3.26
We maintain our view that STI’s current rally will lose
momentum around the 3250 level this month. STI has risen
to within a hairline from the13.9x (average) 12-mth forward
PE resistance level last week. We see the transiting from the
recent ‘rally mode’ to a choppy sideways trend from c.3165
to c.3228 over the next 2 weeks as investors await the start
of the 1Q results season. Near-term resistance is at 3228-
3250, near-term support levels are at 3188 and 3165. Still,
we do not see the index declining below 3165 in the shortterm
ahead of blue chips going ‘ex-dividend’ during the April-
May period.
Among the STI component stocks that we cover, we see
profit taking opportunities for shares of CityDev, UOB and
SGX given their good performance in recent weeks and
limited upside to our fundamental TP. Technically, look to
lock in gains for CityDev shares on further marginal upside
towards $10.53 with support at $10. UOB shares have risen
to just 3.5% below our fundamental TP of $22.5. Traders can
look to lock in gains around current level, support at $21.1.
Meanwhile, shares of SGX have rebounded to just 2% from
our fundamental TP of $7.15.
With the current run-up in the Singapore market, we scanned
through our list of coverage stocks to sieve out the ones that
have exceeded our fundamental TPs with unattractive
technicals and thus avoid. We identified the following stocks:
Ascendas India Trust, Religare Health Trust, United Envirotech,
Amtek Engineering and Petra Foods.
We reiterate our conviction BUY on Ezion with 52% upside
potential to target price of S$3.26. Stock is undervalued,
trading at 8x PE, with a promising 2-year EPS CAGR of 48%
that is backed by firm charter contracts of US$1.9bn (4x
revenue coverage), and an astounding ROE of 27%. Ezion’s
first mover advantage is expected to sustain in the medium
term. Competition concern is unfounded as the industry is in
early phase of growth stage. Ezion also has the potential to
unlock value through takeover offer or securitisation of fleet.
Ezion also announced that it is proposing to acquire a
29.81% stake in JK Tech Holdings. Ezion has proposed to
subscribe 42m new shares in JK Tech at an issue price of
S$0.09 per share. This represents 29.81% of interests in the
company. In addition, Ezion also has the options to acquire
additional 260m shares at the same price, which may lift
Ezion’s shareholding to 64.82%. The consideration of
US Indices Last Close Pts Chg % Chg
Dow Jones  16,412.7 (159.8) (1.0)
S&P  1,865.1 (23.7) (1.3)
NASDAQ  4,127.7 (110.0) (2.6)
Regional Indices
ST Index  3,212.7 (7.3) (0.2)
ST Small Cap  546.2 1.6 0.3
Hang Seng  22,510.1 (55.0) (0.2)
HSCEI  10,110.0 16.2 0.2
HSCCI  4,197.9 (26.8) (0.6)
KLCI  1,856.6 1.0 0.1
SET  1,392.0 0.8 0.1
JCI  4,857.9 (33.4) (0.7)
PCOMP  6,561.2 (25.9) (0.4)
KOSPI  1,988.1 (5.6) (0.3)
TWSE  8,888.5 (16.9) (0.2)
Nikkei  15,063.8 (8.1) (0.1)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 594
Total Daily Vol (m shrs) 2,085
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
4 Apr
Target Price
(S$)
ComfortDelgro Buy 2.03 2.19
Global Logistic Properties Buy 2.63 3.31
Keppel Corp Buy 10.93 12.60
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
4 Apr
Target Price
($)
Ezion Holdings Buy 2.14 3.26
Goodpack Buy 2.33 2.60
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 1.10 1.20
Nam Cheong Buy 0.36 0.46
Centurion Corporation Buy 0.755 0.86
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 3
S$3.78m will be satisfied by the issuance of 1.8m new
shares in Ezion at an issue price of S$2.0445 per Ezion
Share (which represents a 5% discount to the weighted
average price on 4 Apr). JK Tech was engaged in the
provision of IT products and services. Post the exercise, JK
Tech will diversify into exploration, exploitation and
production of oil and gas ("E&P Business"), which shall be
complementary to Ezion’s existing business. As of now, the
transaction is not material. Transaction value is small at only
0.15% of Ezion’s current market cap. The share cap
increase is only marginal at 0.15%.
XMH Holdings announced that it has secured two new
contracts worth US$3.6m. The first contract is for more
than 24 units of Mitsubishi marine engines, with the group
expecting another 10 units to be secured in the next two
months. The contract is considered a breakthrough in their
efforts to gain a foothold in Vietnam, reducing over-reliance
on the Indonesian market where their main business has
been traditionally conducted. The group also secured a
contract for a low speed Akasaka main engine contract, also
under Mitsubishi's licensing.
Gaylin Holdings has accepted a Letter of Offer from Johor
Corporation, a Malaysian state corporation to lease the land
at PLO 225 at Tanjung Langsat Industrial Complex, Sungai
Tiram, Johor Bahru, Malaysia for a registrable lease of 30
years. The Lessee has an option to renew the Lease of Land
for another thirty 30 years. The total area of the land is
approximately 439,956 square feet. The total consideration
for the Lease of Land is MYR10.1m.
The Monetary Authority of Singapore (MAS) is expected to
keep the Singapore dollar appreciating for another six
months when it reviews its policy in a week's time, to guard
against wages-led price hikes later this year, despite the
easing of inflation since Singapore's last monetary policy
statement in October. If so, this would be the fourth review
in a row at which the MAS has kept its stance unchanged,
following a series of adjustments after the global financial
crisis.
In line with the stronger economic growth this year, global
passenger traffic expanded 5.4% y-o-y in February, though
it eased from the 8.2% growth in January. Meanwhile,
capacity grew by 5.2%, nudging passenger load factor up
to 78.1%. For the first two months of this year, passenger
traffic was up 6.9%, surpassing the 5.2% in the same
period last year, according to figures released by the
International Air Transport Association (Iata).