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Ezion Holdings (BUY; Target Price: S$1.17)

Ezion’s latest US$65.7 million charter contract in China takes its total new charters secured in 2012 to US$357 million. In total, we estimate that Ezion will spend US$300-310 million to complete the four liftboat and service rig projects and this will be financed by the recent placement of 110 million new shares at S$0.88. Following the latest win, we raise FY13F net profit by 2 per cent and introduce our FY14F forecast. We remain positive on Ezion: (1) The heavy capex spending will underpin strong EPS (earnings per share) growth over the next three years. All these investments are backed by long-term charter contracts. We are projecting +18% FD (fully diluted) EPS CAGR over FY11-14F. – DMG Research


Hoe Leong Corp (HOLD; Target Price: S$0.285)

Hoe Leong Corp’s FY11 revenue and net profit came in at S$81 million and S$24 million respectively, and were within our expectations. Net revenue increased by 31 per cent YoY due to improvements across all its three segments, while net profit jumped by 236 per cent YoY, driven by a sale-and-leaseback transaction and higher share of results from associates/JVs. With the completion of Korea Crawler Track Ltd, a manufacturing facility for the group’s house-brand products, the group should see growth and margin improvement going forward. Besides cost savings, having control over the manufacturing process would also enable the group better manage its supply and distribution and in time gain market share over ‘pure distributors’ who rely solely on equipment manufacturers for their supply. The group’s transition into an offshore oil & gas player is still in the early stages. It currently operates one PSV and one barge, and has four AHTS and 18 oil tankers under two JVs. The next stage of growth is to demonstrate its operational capabilities and establish a decent track record, such that it is able to secure quality long-term contracts with oil companies. This may take several years. In the meantime, we keep our FY12F estimate largely unchanged, but raise our valuation peg to 5x (previously 3.5x) on improved market sentiments. – OCBC Investment Research


HTL International (SELL; Target Price: S$0.30)

HTL has changed its reporting currency from Singapore dollar to US dollar. FY11 earnings fell 69 per cent YoY to US$5.6 million. Stripping off the one-off restructuring cost of US$3.9 million, core earnings amount to US$9.5 million, in-line with expectations. Margins were squeezed in light of rising raw leather hide prices and wage inflation in China. Going forward, management aims to garner a larger market share especially in North America by taking on high volume orders at cheaper rates. They believe this is crucial to squeeze out the smaller players and when the macro situation turns, they would end up with a large customer base. For its home furnishing business, it is switching to a franchised business model in Germany to cut overheads. A final dividend of 1 S-cent was declared, which combined with the 1.5 S-cent interim would total 2.5 S-cents for the year. But a more prudent payout is expected next year. With a challenging outlook, we maintain SELL on the stock with a slightly higher target price of S$0.30, based on 12.3x FY12F earnings (one year historical trading average). – DMG Research


Keppel Land (HOLD; Target Price: S$3.32)

Since we last reiterated BUY on January 20, the share price has appreciated 31.1 per cent. We see this driven by three catalysts: a large 20 S-cents dividend which eliminated the discount on the corresponding cash component of RNAV – now riskless and to be paid out, increasing expectations of policy loosening in China, and stronger than expected January 12 residential sales in Singapore. Given macroeconomic uncertainties and an ample office pipeline of 4.2 million sq ft NLA in FY12-13, we believe it is too early to call a bottom for the domestic office sector, a major driver for KPLD’s share price. Over 2H11, we saw office rents peak as Grade A rents declined 0.5 per cent QoQ in 4Q11 while Grade B rents fell by 0.4 per cent. We see persistent downside risks for the share price should headline rentals and capital values continue to decline. We also remain cautious on the residential sector and note that luxury and mid-tier segment sales had been subdued YTD. The bulk of KPLD’s unsold exposure is outside the mass market, except for The Luxurie (368/622 units unsold), and there is limited upside in terms of development sales ahead, in our view. – OCBC Investment Research


Marco Polo Marine (BUY; Target Price: S$0.48)

With the commissioning of its third dry dock in January this year, we understand that this bigger and deeper facility, which measures 190m by 45m by 9m, is fully capable of docking merchant vessels up to 45,000 dwt. In our view, MPM is well-positioned to take advantage of the buoyant demand for ship repair and conversion business, bolstered by the thriving commodity shipping as well as oil and gas activities in the region, in particular Indonesia. MPM successfully clinched a ship outfitting contract worth S$22.5 million in January. Following this latest order win from an undisclosed third-party customer, the total value of newbuild, ship repair and conversion projects procured by the group increased to S$57.5 million. We forecast an 18 per cent increase in FY12 EPS (earnings per share) given that about 80 per cent of its orderbook will be recognised during this financial year. With the completion last year of its acquisition of a 49 per cent stake in associate company PT Pelayaran Nasional Bina Buana Raya (BBR) and the accompanying reflagging exercise, management’s next goal is to make BBR financially self-sustaining through a listing on the Jakarta Stock Exchange. Assuming that it is able to list at 8x forward PER (price earnings ratio), we estimate that MPM’s stake in BBR could be worth about 31 per cent of its current market capitalisation. If the listing eventuates, we believe it could help crystallise value for MPM and provide a major re-rating catalyst for the share price. MPM has been a relative laggard in the recent market rally even compared with its other mid-cap offshore and marine peers. We see the widening valuation gap as unjustifiable in the light of recent positive developments. – Maybank Kim Eng Research


United Envirotech (BUY; Target Price: S$0.41)

UE’s 3QFY12 earnings disappointed, down 53.8 per cent YoY to S$1.9 million, mainly due to lower than expected revenue and lower than estimated share of profits from associates and jointly controlled entities. UE has recently acquired an operation and maintenance company, Anhui Water Star Treatment and Operation Co Ltd for RMB5 million. Water Star, with >40 staff, manages a wastewater treatment plant in Hefei, the capital of Anhui Province. This plant has been named Top 10 outstanding wastewater treatment plant in China. Thus, we believe UE’s technical and manpower competency would be beefed up with this acquisition. We understand that UE is pursuing some municipal wastewater treatment projects, with some worth more than RMB100 million each. We cut our earnings estimates on the back of slower than expected deployment of KKR’s funds. Our FY12 and FY13 earnings are revised downwards by 20.1 per cent and 22.2 per cent and we now estimate earnings to come in at S$10.4 million and S$15.2 million respectively. With a positive macro outlook, we maintain our BUY recommendation with a lower target price of S$0.41, based on 13.2x FY13 EPS (earnings per share). – DMG Research