OCBC Report 16 Apr 14

MARKET PULSE: KepLand, Ezion

16 Apr 2014

KEY IDEA Keppel Land: Chinese home sales still healthy KPLD reported 1Q14 PATMI of S$87.7m, decreasing 9.2% YoY mostly due to the absence of a tax write-back recognized in the same period last year. We judge this set of results to be mostly in line with expectations and YTD PATMI now constitutes 19.7% of our full year forecast. The group sold 54 homes in Singapore over 1Q14, mostly from The Glades which is now 23% sold (~170 out of 726 units). The run rate over 1Q14 so far represents 14.5% of the 370 total units sold in FY13, in line with expectations for a fairly muted FY14 in terms of SG home sales given the weak outlook. In China, 570 home units were sold over the quarter, down 33% YoY versus the 850 units sold in 1Q13, though management highlights that the achieved sales value was actually 5.9% higher to a change in mix to higher-end projects. Maintain BUY with an unchanged fair value estimate of S$4.09 (30% discount to RNAV). (Eli Lee) MORE REPORTS Ezion Holdings: New contracts worth US$78.7m secured Ezion Holdings Limited announced two contract wins last evening with an aggregate value of US$78.7m. The first is a charter contract worth ~US$35m for the provision of a service rig to a Middle-Eastern state-linked company over a three year period in the Arabian Gulf. This service rig is expected to be deployed by 1H15 after its refurbishment and upgrading works. The second order entails a charter contract with a value of US$43.7m over a three year period, in which Ezion will provide a service rig to support a South Asian based national oil company in the Arabian Sea. This service rig is also expected to be deployed in 1H15. YTD, Ezion has already secured US$260.3m of contracts, which underscores its dominant position in the service rigs market, especially in the Asia-Pacific region. Ezion has currently called for a trading halt with immediate effect this morning. We will be attending an analyst briefing held later in the afternoon and will provide more details thereafter. Maintain BUY and S$2.57 fair value estimate for now, pegged to 12x FY14F core EPS. (Low Pei Han and Andy Wong)

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NEWS HEADLINES - US stocks ended a volatile session higher, lifted by gains in blue-chip names though persistent weakness in momentum names limited the Nasdaq's advance. - Retail sales in Feb slumped 9.5% YoY, distorted by base effects from the Chinese New Year holidays which took place in Feb last year. - Developers sold 480 private homes in March, down from 739 units in February and 2,793 units in Mar last year. - Keppel Telecommunications and Transportation posted a 2.9% YoY increase in net profit to S$15.4m for 1Q14. - Continued recovery in dragon fish revenue boosted ornamental fish seller Qian Hu Corporation's 1Q14 results with net profit up 86% YoY at S$115,000. - Capitaland‘s subsidiary, The Ascott, has signed a master lease agreement with Mitsubishi Estate Company to provide serviced apartments in the Japanese capital. - Yanlord Land Group has acquired a prime residential development site in China's district of Suzhou Gao Xin for about CNY1.35b (S$271.6m). - The next growth areas in Asia might be in healthcare, tourism, insurance and the environment, said Peter Sartori, head of Asian equity at fund manager Nikko AM.