Stock Picks

Ascendas India Trust: Buy (DBS, 28 Aug08)
AIT has entered into a sale deed to acquire 96,000 sq ft of office space in ITPB from Tata Consultancy Services (TCS) for a consideration S$9.8m, which has been leased back to TCS. The completion of the sale will increase AIT’s ITPB space by 6% to 1.8m sq ft and 2% to its total portfolio. The acquisition is to be funded by debt and is expected to be immediately accretive to current unit holders when completed. As such, we have adjusted our forward DPU estimates in FY09 and FY10 by 0.5% and 1.4% respectively to 6.9cts and 7.7 cts. Moving forward, AIT is currently engaged in the development of 1.5m sqft of SBA (3 buildings) in ITPB and ITPC. It is also looking to develop 2.7m sq ft in Bangalore. AiT is currently trading at a FY09-10 DPU yield of 9.4% - 10.5%. We have maintain a Buy call with a target price of S$0.91

Goodpack: Buy (Kim Eng, 28 Aug)
Goodpack reported a net profit of $29.5m (up 20% Y/Y) which was 7% below our expectation and 5% below consensus. Logistics and handling cost was much higher than what we had expected, due to the continuing high initial positioning cost for the new synthetic rubber customers. Plans are in place to reduce the cleaning cost per box in Europe by more than 50% with two sorting plants in Europe and the US. The third plant is expected to be set up in two months' time. We lowered our estimates for logistics costs on account of potential greater cost savings accrued to in-house cleaning facilities and better trade lane matching. Correspondingly, we have raised our net profit forecast by 4-5%. Goodpack is trading at near historical low. Our target price is hiked to $1.65. Upgrade to BUY.

Cosco: Accumulate for potential upside (DBS Research, 28 Aug)
S-chips have remained weak during the past week with the FTSE China Top 20 Index down nearly 4% from August 19 despite the SSEC holding above the August 19 close. Among the S-chips, Cosco Corp is showing signs of base building. The stock has held above our anticipated short-term base of $2.04. Accumulate at slightly above the support level. We maintain our view that the stock should head for $2.56 if the SSEC rises to 3000. A tight stop-loss can be set upon a close below $2.03.

SIA Engineering: Hold (DBS Research, 28 Aug)
We have downgraded SIA Engineering to Hold in the absence of any near term catalysts. Target price lowered to S$ 2.70 (Prev S$ 4.10). It has revised FY09 earnings estimates and now expects it to be below FY08 figures, largely as a result of lower base maintenance volumes. This is mainly due to the relaxation of maintenance schedules for the SIA fleet, addition of new planes and the phasing out of older ones.

LONGCHEER: Outperform (CIMB, 28 Aug)
With the likely issue of 3G licences following the restructuring of China's telco players, China may embark on another cycle of rapid handset innovation in 3G technologies which may necessitate the use of independent handset designers such as Longcheer once again. Rising contributions from wireless content also augurs well for handset software providers that are able to integrate content into handset designs. Despite the disappointing 4QFY08 results which saw revenue growth of just 7% year-on-year vs. our expectation of 21%, we maintain our Outperform rating and target price of S$0.69. Upcoming Chinese 3G licences and increasing contributions from content-driven revenue are potential catalysts for the stock.

Olam: Sell (CLSA, Aug28)
Since listing in 2005, Olam has consistently delivered high-double-digit earnings growth (31% FY04-07) by expanding year-on-year volumes and adding value along the supply chain. However, as Olam now occupies leading market share positions in a significant number of its 14 product areas, we believe that incremental volume upside is now limited. Add to this, demand for a number of these commodities has been relatively flat for the past decade. We are sanguine on continued net contribution margin expansion as the Group leverages on efficiencies along its supply chain. Yet in a peaking volume scenario we expect net-income growth to slow going forward (Cagr of 19% for FY07-11 compared to 40% for FY03-07). Given the lack of clarity in Olam's M&A pipeline, especially in terms of segments and geographies, we exclude inorganic growth from CLSA base case forecasts. We believe that the stock should be trading closer to peers. Our DCF-based target price implies 18% downside.

Tiong Woon: Outperform (CSFB, 28Aug)
Tiong Woon reported strong results for its FYJun08, with 58% year-on-year (y-o-y) revenue growth, and earnings jumping 26% to S$28.3m, largely driven by its heavy lift & haulage unit (+ 48%), and a new S$26.4 m revenue contribution from its fabrication business. Profit-before-tax (PBT) margin for heavy haulage division was up from 19% to 30%, driven by continued demand strength and tight supply in the crane market. Going forward, the growth outlook for Tiong Woon seems strong, buoyed by its investments into oil & gas and petrochemical sector activities in Asia. Our fair value remains intact at $0.65, and we reiterate our Outperform rating.

Raffles Education Colleges: Hold (Citi, Aug27)
We have downgraded REC to a Hold as we see organic growth slowing down as it encounters government restrictions in setting up new colleges in China. As a result, we also see more limited synergies near term with the acquired Chinese colleges, and a likely funding gap due to past and planned M&A. We are lowering our target price to S$0.95, based on lower FY09 estimates and target P/E of 21 times. Why not a Sell? We remain positive on REC's programs' value proposition and its aspirations to building a private college network in the long term. Growth in China being restricted by a regulatory overhang should inevitably be resolved.

China Farm Equipment: Buy (DMG Research, 28 Aug)
CFE's management have revealed to us that several small orders have been made through their Thailand distribution, expected to be delivered in the next few months. Recently about 45 machines (25 combined harvesters and 20 plough machines) have been purchased, and based on the positive feedback the company remains optimistic that more orders will be made in the near future. These new developments are a positive sign in that they will help build CFE's brand name and global presence. Management has also updated us that their new diesel engine plant is on track with construction and is expected to be commissioned by mid-FY09. The new plant will to offer an additional 100 to 150k units to be produced annually. The current plant is able to produce 200k units per annum. CFE is currently trading at 5.0x FY08 P/E and 4.4x FY09 P/E. We have lowered our price target from S$0.88 to S$0.56 due to general P/E compression for S-shares. However, we maintain our earnings forecast at RMB85.7m for FY08F and RMB95.7m for FY09F. Given the uncertainties in the financial markets, we expect volatility to remain high for CFE.

Noble Group: Buy (Nomura, 27 Aug)
Following a stronger than expected 2Q08 on better-than-expected gross margins as Noble builds out its supply chain, we lift estimated recurrent earnings by 7.4% to US$407m for FY08 and 1.8% to US$454m for FY09. Our headline net profit figure for FY08 of US$455m includes a US$47.8m exceptional gain from divestments reported in 1Q08. With the build-out in the group's supply chain underpinning better than expected margins, the upgrades to forecast profits flow from revised gross margin assumptions for the metals and minerals divisions and the agricultural division. We forecast a blended gross margin for the commodity business of 2.97% for FY08F (previously 2.85%), versus a 3.22% gross margin achieved in 1H08. Our assumptions for the third-party logistics business have been tweaked, with gross margin now forecast at 17.5% in FY08, versus our prior estimate of 20.0% and Noble's 1H08 logistics margin of 17.6%. We reaffirm our BUY call with a fair value estimate of $2.29/share (previously S$2.65). Our revised fair value estimate is equivalent to an FY08F P/E multiple of 13.6 times, which we see as attractive in the context of other listed supply chain managers.

Man Wah Holdings Ltd: Buy (OCBC Research, 27 Aug)
Man Wah has announced its plans to purchase Famous Bedding, a mattress and bedding accessories company in China, from its directors. The acquisition is priced at RMB83m, representing 10x historical PER and 5.5x forward PER. With this, management aims to strengthen its China business with the eventual goal of spinning it off as a separate listed entity. Famous Bedding is expected to expand Man Wah's product range and boost operational synergies for the group. However, as the plans are preliminary and subject to various approvals, the exact impact of the acquisition and spin-off remain vague. On the positive side, a spin-off could spark an upward re-rating for the stock and the acquisition will boost earnings. However, shareholders can expect dilution arising from the issuance of new shares as part of payment for the acquisition. Nevertheless, we view this development positively and maintain our Buy rating and S$0.51 fair value estimate.

Genting International: Hold (OCBC Research, 27 Aug)
Genting recently reported a weak set of 2Q08 results, where the poor performance of its UK casinos was the main reason behind the lacklustre showing. Going forward, the group expects UK's economic outlook to remain poor and have a continued impact on disposable income and hence the trading results of its UK operations. While Resorts World@Sentosa (RWS) is on track for a soft opening by early 2010, we do not see any significant earnings contribution until 2011. In view of the still muted outlook for its UK operations, and the risk of a protracted economic slowdown, we have cut our FY08 and FY09 revenue estimates and now expect Genting to post losses in both periods. We have also reduced our valuation for its UK operations, resulting in a lower fair value of S$0.63 (vs. S$0.76 previously). Although this still offers more than 24% upside for the stock, we do not see any catalyst for short to medium term, barring a swift rebound in the UK economy; RWS contribution will only be significant from 2011 onwards. As such, we downgrade our rating from Buy to Hold.

ComfortDelgro & SMRT: Buy (DMG Research, 27 Aug)
From an average of US$134/bbl in Jun 08, crude oil price has fallen to an average of US$117/bbl for the first half of Aug 08. This decline will help to raise ComfortDelgro's and SMRT's earnings. Our sensitivity analysis shows that a 10% fall in crude oil price will raise ComfortDelgro's FY09 net profit by 9% and SMRT's FY10 net profit by 6.4%. We expect further weakness in crude oil price going ahead, and we believe this will help drive CD and SMRT share price upwards. ComfortDelgro is our top pick in the sector with a S$1.85 target price, based on sum-of-the-parts valuation. SMRT is also a BUY with a S$2.08 target price.

Tiong Woon: Buy (DMG Research, 27 Aug)
While we remain positive on Tiong Woon's prospects from its exposure to the still buoyant oil and gas and petrochemical sectors, we opt to remain cautious in the face of deteriorating global economic environment. With weaker sentiments affecting investors' risk appetites, we have lowered our target price earnings ratio to industry average of 6 times FY09 earnings. Hence, we are lowering our FY09 earnings for Tiong Woon from S$34.9m to S$31.3m (down 10.3%). We have also introduced our earnings estimates for FY10. In accordance with the above, our revised fair value now stands at S$0.56. With the company's stock currently trading at an undemanding valuation of 3.8 times FY09 earnings, we maintain our buy rating.

AusGroup: Sell (UOBKayHian, 26 Aug)
AusGroup reported a net profit of A$5.7m (-7% yoy) and A$14.4m (-28% yoy) for 4QFY08 and FY08 respectively. Excluding the A$10.9m write-back in 4QFY08, net profit would turn out to be a loss of A$5.2m. Turnover increased by 19% to A$99.2m for 4QFY08 and 35% to A$379m for FY08 while net profit margin was 6.4% (4QFY07: 7.3%) and 3.8% (FY07: 7.1%). We have slashed our FY09 and FY10 earnings forecasts by 46% and 36% respectively to A$20m and A$28.5m. Based on a blended valuation of fair values derived on 5x FY10 PE and 1.5x FY08 P/B, we chop our fair value for AusGroup to S$0.43. The 5x PE of FY10 is in line with the Singapore offshore services small capitalisation stocks' valuations, while the 1.5x FY08 P/B is based on small capitalisation resource fabricators sector's valuations. We rate AusGroup a Sell as the stock is fully valued.

AusGroup: Buy (OCBC Research, 26 Aug)
Despite disappointing results and decline in margins, we still think AusGroup is a Buy on industry outlook and the current low price, which may be a buying opportunity, but our fair value estimate drops to S$0.60 at 12x FY09F PER. The key catalyst for re-rating will be an improvement in its performance over FY09 and a re-building of its gross margin.

Silverlake Axis: Buy (OCBC Research, 26 Aug)
SAL reported a disappointing set of 4Q08 results, with revenue down 7.5% YoY and 83.3% QoQ at MYR14.0m, although net profit jumped 375.8% YoY (but down 43.1% QoQ) to MYR11.6m. For the full-year, revenue climbed 11.2% YoY to MYR146.9m, about 9.7% below our forecast, and while net profit jumped 36.0% YoY to MYR108.8m, it was about 5.1% shy of our estimates. Going forward, management revealed that it is in talks with several existing customers for major upgrades of their core banking software, as well as talks for more transaction-related outsourcing licensing deals; but it was unable to provide any clarity on when these deals would be concluded. In light of this lack of order visibility, which may further exacerbate its revenue lumpiness, we have decided to trim our FY09 estimates by around 13%. And due to the still uncertain economic environment, we have also moved to pare our valuation from 12x blended FY08/09 to 10x FY09 PER, which in turn eases our fair value from S$0.55 to S$0.42. But as the stock still offers a potential upside of 61% from here, we maintain our BUY rating.

China XLX: : Buy (DBS Research, 26 Aug)
As one of the largest and most efficient urea producers in China, China XLX is well positioned to ride on the robust demand for urea-based fertilizer and potential lift in price ceiling by 4Q08. The potential raising of the price ceiling after the Olympics is the key catalyst, which will underpin earnings surprises and share prices in 2H08. We have turned more optimistic on such favourable policies following the recent change in the government’s growth stance overshadowing previous inflationary concerns. In addition, the industry's average production cost for a ton of urea has surged above RMB1800, surpassing the price ceiling of RMB1725. This is putting an increasing pressure on the government to lift the urea price ceiling in order to maintain a healthy flow of fertilizer supply. We favor CXLX as a key beneficiary of such favorable shift, ascribing to its excellent cost competitiveness and R&D capability that drives continuous efficiency improvement. While most of the players are already suffering, CXLX is still enjoying a lucrative base gross margin of 20%-25%, attributable to its strong technical expertise that reduces coal wastage and high self sufficiency of 70% for electricity, resulting in lower cost of RMB450-500/ton relative to industry average. We are optimistic on CXLX's medium term outlook in the light of its cost leadership, huge exposure to the fast growing agriculture industry in China and upside surprise in the event the price ceiling is lifted. We are initiating coverage on CXLX with a Buy rating and TP of S$0.68, based on 10x FY09.

Micro-Mechanics: Hold (OCBC Research, 25 Aug)
MMH reported a decent set of FY08 results over the weekend, with revenue up 10.1% YoY to S$38.2m and net profit up 6.7% year-on-year (y-o-y) to S$8.9m. However, during this last quarter, MMH actually saw a 20% y-o-y or 16.9% quarter-to-quarter (q-o-q) slump in its net income to S$1.7m, due to higher production costs, admin expenses and effective tax rate. While we remain confident of MMH's diversification strategies and cost management measures, we are not neglecting the more challenging economic conditions and margin pressures that MMH would likely encounter. As such, we lower our FY09F earnings by 8.2%, yielding a lower S$0.69 (prev. S$0.74) fair value on 10x FY09F PER. As the stock price has also appreciated since our last report, we now see limited upside. Downgrade to HOLD.

Sembawang Marine: Buy (CIMB, Aug22)
Despite the recent softening of oil prices, Semb Marine's order enquiries have not been affected. Its management is positive that 2008 will be a record year for it orderbooks and earnings. To date, it has an orderbook of S$9.5bn (FY07: S$7bn) with year-to-date new orders of S$4.4bn (FY07: S$5.4bn). SMM can easily surpass last year's record if its wins the FPSO conversion contract P-61 from Petrobras (above US$1bn). Management is also expecting margins to improve year-on-year from the execution of higher-value contracts, better production efficiencies from repeat designs and capacity expansion by changing work flows in the yards. For instance,Semb Marine is scheduled to deliver three semi-submersibles in 2011 but hopes to improve its capacity to four units. No change to our earnings estimates and target price of S$5.25, still based on blended valuations. Positive surprises in 2H08 could come from margin expansion and stronger-than-expected order wins. The stock remains our top pick in the big-cap offshore and marine (O&M ) basket.

Sinotel Technologies Limited: Buy (Phillip Securities, 22 Aug)
The current consolidation of China's telecommunication industry will bring about huge capital expenditures for mobile and internet infrastructures, services and products. The need to upgrade existing infrastructure to ensure competitiveness as well as investments in the long-awaited 3G networks will see capital expenditures from the three main carriers amounting to billions of dollars. Sinotel Technologies Limited provides a wide range of customized wireless telecommunication applications and solutions to participants across the telecommunication value chain in China and we believe it is well positioned to benefit from this restructuring. We have initiated coverage on Sinotel Technologies Limited with a BUY rating at fair value estimate of S$0.27.

Thomson Medical Centre: Buy (DMG Research, 22 Aug)
The Singapore government announced a new enhanced parenthood package to encourage couples to have more children. The increased benefits would free up more cash for parents. Hence, they may be more willing to spend on optional medical tests for their newborns, which could result in additional revenue for the hospitals. In turn, this would benefit the three medical providers (Raffles Medical Group, Parkway and Thomson), as all three provide O&G services. However, with its focus on O&G services, we believe TMC would stand to benefit the most from the expected increase in demand for such services. The enhanced Package also bodes well for its Thomson Fertility Centre, as couples may be more willing to seek fertility treatments. TMC's average hospital bill is one of the lowest (based on 50th percentile bill size), making it an attractive private hospital to go to for baby deliveries. Coupled with the enhanced Package encouraging couples to have more babies, we expect the volume of deliveries at TMC to increase, boosting its revenue and earnings growth. We have a fair value of S$0.76 for the stock, based on 19x FY08/09 blended earnings. At the current price of S$0.57, this presents a potential upside of 33.3%.

ASL Marine's: Buy (DBS Research, 21 Aug)
ASL Marine's FY08 results were better than expected. Group sales grew 26% y-o-y to S$400.4m, while net profit grew 50% to S$60.3m. Going forward, we maintain our positive view for the group. Earnings will be backed by good order book visibility for its shipbuilding division, and steady demand for ship chartering and repair services. Maintain Buy with target of S$ 2.07 (Prev S$ 2.01).

Singapore Press Holdings (SPH): Buy (DBS Research, 21 Aug)
Nielsen Media's latest AdEx figures show that SPH's newspaper display and classified ad volumes for July 2008 grew by 12.6% y-o-y. We believe that these figures indicate that SPH is right on track to meet our assumption of 7% yoy growth in display and classified ad volumes for FY08, reflecting robust domestic consumption spending in Singapore thus far. We continue to like SPH for its attractive valuation and as a defensive stock, backed by a net yield of more than 7.5%. Buy with target of S$ 5.75.

Straits Asia Resources: Buy (DBS Research, 21 Aug)
Straits Asia Resources is acquiring stakes in Madagascar and Brunei green-field coal mines from parent, Straits Resources Ltd (SRL). The acquisition price is US$100.3m. Early assessment of the Madagascar mine suggests an exploration target of 300-500 mt of resources with minimum annual production of 3-5mt. The Brunei mine is still in the initial exploration stage. Buy with target price of S$3.49.

China Milk Products: Buy (Phillip Securities, 21 Aug)
The growth in the China dairy industry has created an unprecedented increase in demand for raw milk supply. To feed the increasing consumption, dairy products manufacturers either purchase raw milk from local farmers or import milk powder from overseas. China Milk Products Group Ltd (CMP) is engaged in the production of pedigree bull semen, pedigree dairy cow embryos and raw milk in China. With the domestic focus on breed improvement, the company is situated perfectly in the value chain to capitalize on the industry growth. It also produces 75% of the feed materials for its herd and is vertically integrating into raw milk processing for its customers. CMP unique positioning ensures that it can generate strong cash flows from its businesses.We value China milk at S$0.940 and initiate with a BUY recommendation.

China Milk: Buy (DMG, 20 Aug)
In our view, The long term outlook for China Milk remains attractive because of the shortage of milk products in China. Rising consumer affluence, rapid economic growth in China, and increasing demand for milk products in China are all contributing factors which will favour China Milk in the years to come. In order to increase the supply of raw milk in China, high volume pedigree bull semen is needed and healthy and strong cow embryos are required. We believe that China Milk's core business will drive the demand for raw milk in China. We have a price target of S$0.99 based on 6x FY10 P/E which is 0.5x FY10 PEG. This implies an upside of 46% from current levels. The company is currently trading at 4.4x FY09 P/E and 4.0x FY10 P/E which is considerably lower compared to its regional peers of 20.2x FY09 P/E based on consensus.

StarHub: Buy (DMG, 20 Aug)
StarHub has announced that it will be launching its suite of on-demand services – known as Demand TV – today, claiming to have the widest range of quality content that will be available upon customers' demand. StarHub Digital Cable customers can make one-off purchases of content and view the selected content whenever and as many times as they wish, over a limited time period. Highly popular sports programmes like the Barclays Premier League (BPL) matches and WWE and Asian dramas (Hong Kong, Taiwan and South Korea) will be part of the buffet. The latest development is unlikely to have very much impact on the company's bottom line in the near term. We maintain our earnings estimates of S$292.7m (-11.4%) in FY08 and S$347.4m (+18.7%) in FY09. The stock price has fallen more than 8% within the past two weeks. At S$2.57, it is trading at 14.9x FY08 and 12.6x FY09 P/E, and offers a prospective yield of 7%. Based on our discounted cash flow model, we attain a target price of S$3.09.

Swiber Holdings: Buy (DBS Research, 20 Aug)
Story: We observe that Swiber Holdings' estimated total bids submitted has risen from US$1.8b as of Feb 2008 to US$3.6b as of August 2008 for jobs targeted over the next five years. The doubling in orders pipeline is likely due to increase bids for offshore jobs in India and the Middle East. This ensures more spread out orders win throughout 2009 against the seasonal contracts awarded in its core Southeast Asian markets. We also believe that the coming round of contracts award season in Southeast Asia would see Swiber securing long-term collaborations with clients, similar to the US$250m worth of offshore works in Thailand for a period of 5 years commencing 2009 with CUEL Limited. This will enhance Swiber's order book and earnings visibility, and is in line with our view that oil companies will increasingly lock in proven offshore contractors amidst equipment/personnel shortages in the industry and high oil prices. We recommend BUY on Swiber ahead of the coming contracts award season, which is expected to be its strongest on record. Fair value stays at S$3.49.

Soilbuild: Hold (Phillip Securities, 20 Aug)
Due to the negative sentiment in the property market and the rise in construction costs, we have reduced our RNAV estimates for Soilbuild. Our fair value for the stock is cut from S$1.48 to S$1.03 based on 40 percent discount to the RNAV of S$1.72. As there is limited upside from the current share price, we downgrade our recommendation from BUY to HOLD.

Food Empire: Buy (OCBC Research, 19 Aug)
Singapore's efforts to encourage business ties with Russia serve as an endorsement of Russia's bountiful investment opportunities and flourishing economy. Indeed, emerging markets such as Russia, Ukraine and Kazakhstan are expected to outpace the global economic growth in the coming years. Food Empire Holdings (FEH) is in the sweet spot of all the action – it manufactures and markets instant beverages and snacks to over 65 countries with a strong focus on emerging markets such as Russia. Having established its presence in these countries, it is poised to benefit from their growing F&B markets. We forecast earnings to grow by 11% in FY08 and 9% in FY09. We initiate coverage on FEH with a BUY rating and S$0.65 fair value estimate based on 10x blended FY08/09 PER.

Noble Group: Buy (Merrill Lynch, 15 Aug)
Noble Group's 2Q08 net profit of US$120m was 20% ahead of consensus expectations. Revenue grew 75% yoy while gross margin improved from 3.3% to 4.1%. Gross profit per ton rose from US$5.7 to US$10.8. We have raised our FY08 and FY09 estimates by 12% and 5%, and kept our DCF-based price objective (PO) at $3.15. The energy segment's performance stood out. 2Q gross profit quadrupled from a year ago and doubled quarter-on-quarter to US$157m. This was achieved on the back of higher coal & coke prices and tonnage. More significantly, we think the strong margins in the coal business will likely be sustained into FY09 due to the visibility in production volume and prices. We continue to like Noble as a proxy to commodity volume, with an additional earnings kicker through its exposure to coal. We reiterate our Buy rating with a DCF-based PO of $3.15.

Hotel Grand Central: Hold (OCBC Research, 15 Aug)
Hotel Grand Central delivered an in-line 2Q performance with a 5% year-on-year (y-o-y) decline in revenue to S$32.4m. Operating profits rose 16% to S$8.9m due to a 11% y-o-y YoY decline in operating expenses. Increasingly, we are seeing more data pointing to weakness in the Australian, New Zealand and Singapore economies. There were also cuts in GDP forecasts for all three countries. As HGC operates in these three markets, its fortunes are closely linked to the economic health in these countries. We have moderated our FY08 and FY09 earnings to reflect the more uncertain operating climate. While the stock is trading at a discount to book, we believe that with present market weakness, the probability of any near to medium term re-rating is unlikely. As such, we are lowering our fair valuation from S$1.25 to S$0.88 and downgrading our rating to HOLD

China Sports International: Buy (OCBC Research , 15 Aug)
CSI recorded a 50% year-on-year increase in 2Q08 revenue to RMB 465.9m, supported by strong sales in its Yeli brand of products, with sales of Yeli footwear rising 70.1% y-o-y to RMB304.7m, and those of Yeli apparel up of 66.5% to reach RMB86.1m. The improved revenue was also boosted by the higher average selling prices (ASP) achieved during the quarter. Dip in profit margins due to higher intensity of advertising and promotional activities, which was in line with the Group's strategy of increasing A&P activities, as it builds up its YELI brand through a step-up in TV commercials and sponsorships. Major sporting events such as the Beijing 2008 Olympics, the upcoming 2009 Jinan All China Games, the 2010 Guangzhou Asian Games and the 2011 Shenzhen World University Games would raise the awareness for sports and hence, the demand for sporting goods in China. The sports fashion market in China is expected to grow significantly too, as more consumers are using sportswear as casual wear. CSI's share price has fallen 32.4% over the past three months in line with the overall downturn in the stock market. At S$0.355, CSI is trading at a PE of 5.7x. Its closest listed peers are currently trading at an average PE of 13.1x. Hence, we are lowering our PE valuation for the stock. We are maintaining our BUY call with a revised target price of S$0.70 (previously S$0.94), based on 10x FY08/09 earnings.

ST Engineering: Buy (DMG Research, 13 Aug)
STE saw 2Q08 revenue inch up 0.2% to S$1,300 million while net profit fell slightly by 2.3% to S$119.9m as better performances from its Electronics and Marine segments failed to fully offset lower contributions from the Aerospace and Land Systems businesses. Nevertheless, we note that STE's results were achieved despite a challenging environment for its mainstay Aerospace business. We have reduced our FY08 earnings estimate by 5.7%, from S$545m to S$514m. This represents a net profit growth of 2.1% for the year, down from our previous estimate of an 8.3% increase. At the current price of S$2.80, the stock is trading at 16.3 times FY08 and 14.7x FY09 P/E, which is at the lower end of the historical P/E band. Dividend yield, at 6.1%, is attractive compared to other blue chips in the market. Our target price has been reduced to S$3.41, a 21.8% upside from current levels. Maintain BUY.

Pharmesis International: Neutral (DMG Research, 13 Aug)
The pharmaceutical and health supplements industries in China continually face keen competition, which contributed to a decline in FY07 sales for Pharmesis. Pharmesis' launch of a new health tonic (cordyceps sinesis) is however expected to boost revenue going forward. Its Harmony brand of cordyceps won the Best Luxury Tonic category in the 2008 Hurun Best of the Best Award, a survey on the preferred brands among China's richest. Pharmesis has also been focusing on building the brand awareness for its cordyceps, through participation in high-end luxury products exhibitions and print media which will help to further boost sales of its cordyceps products. Given that it produces specialized drugs that are not classified as OTC (over-the-counter) drugs, we believe it should trade at a higher PE compared with pharmaceutical companies that manufacture generic drugs. Its peers are currently trading at 7.4 times forward PE. We ascribe a PE of 10 times for Pharmesis. This translates into a target price of S$0.12. Hence, we have a NEUTRAL recommendation for this stock.

Ho Bee Investment: Buy (DBS Research, 12 Aug)
Ho Bee reported another quarter of lower earnings in line with our expectations, attributed to lower recognition of revenue from its development projects. Turnover dipped 27% to S$116.8m while 2Q08 net profit slid 70% to S$37m, though this was as a result of the booking of a fair value increase of S$71m in its investment portfolio during the year-ago period. Excluding this, net profit would have dropped a lower 32%. Ho Bee launched part of its 50-50 project (with NTUC Choice Homes) Dakota Residences in 2Q08 and sales were encouraging. Excluding Dakota from the mix, about 50% of its remaining landbank is in the high-end segment (Orchard Road and Sentosa), with 70% of this on Sentosa itself. Though high-end sales are currently slow, the scarcity factor of Sentosa housing, coupled with Ho Bee's development track record on the island, should place it in a good position when the 'feel-good' factor that is critical to the high-end market makes a return. Earnings visibility is the key reason for our positive view on Ho Bee. By the end of FY09, the company would have recognised five more projects, all of which are at least 90% sold. This points to a strong FY09 in terms of earnings, which would bring its net gearing down from its current 1.2 times to around 0.6x based on our FY09 forecast. Stock is currently trading below its book NAV of S$1.16 (as of 1H08) and valuations are undemanding. Maintain BUY, with a target price of S$1.24.

Amara Holdings: Hold (DBS Research, 12 Aug)
2Q08 results were below expectations. Gross revenue fell 36% y-o-y to S$17.2m. But operating profit grew 48% y-o-y to S$8.3m due to a one-off gain of S$3.6m from the disposal of its Vietnam hotel. Stripping this out, profit from operations fell 16% to S$4.4m, due to higher operating costs following the commencement of operations at Amara Sanctuary. The hotel division continued to drive the group's performance. However, Amara's property development unit turned in lacklustre results with no sales recorded for The Linear in 2Q08 (based on URA data). Amara could find it increasingly difficulty to sell the remaining 74 units due to new supply of properties in 2009. With zero sales from The Linear and uncertainty over the launch of its Killiney site, we expect Amara's share to trade sideways in the near term. As such, we downgrade Amara to HOLD, and target price to S$0.50 based on 40% discount to its RNAV.

Pine Agritech: Sell (UOBKayHian, 12 Aug)
Pine Agritech released another disappointed quarterly results. Turnover decreased 9.4% y-o-y to RMB 356.4m, while net profit plunged 62.9% y-o-y to 53.3m in 2QFY08. The worse-than-expected result was mainly due to the margin erosion trigged by the soybean price hike and sharper drop of its Soy Oligosaccharide Syrup (SOS) products sales. Given current weak consumption, we do not expect Pine to increase ASP (average selling prices) aggressively to boost sales revenue as well as alleviate cost pressure. Management intend to further explore the export market for its SPI (soy protein isolates) products; however, this can not change the whole picture, as the SPI product has relatively lower margin and the export business accounts for less proportion in Pine’s SPI sales. Lackluster performance of the SOS products, fading contribution from the peptide products and the persistent soybean price hike lead Pine's prospect to be more challenging. As such, we cut our FY08-10 earnings forecast by 20-23% respectively, resulting in a lower target price from S$0.18 to S$0.10. Maintain Sell.

Valuetronics Holdings Ltd: Buy (OCBC Research, 8 Aug)
VHL, whose core businesses are in the OEM and ODM (original equipment and design manufacturing) services, may stand to benefit from the growing outsourcing trend. Industry watchers also paint a rather encouraging Electronics Manufacturing Services (EMS) industry outlook against the backdrop of a slowing US economy. According to a March research report by IDC, the worldwide EMS industry (EMS and ODM sectors) is expected to grow at 14% in 2008 and 12% in 2009, or at a five-year growth rate of 10% for 2007-2012. We value VHL using the earnings multiples method and derive at a fair value estimate of S$0.26 after applying a 6x FY09F earnings. As VHL is currently trading at a 39% discount to our fair value and at an attractive 4.3x FY09F PER, we are initiating coverage on VHL with a BUY rating. A prospective dividend yield of 7% in FY09 should provide further enticement.

Singapore Exchange: Buy (OCBC Research, 8 Aug)
Singapore Exchange (SGX) posted FY08 earnings of S$478.3m, up 13.4%. Asian business accounted for 45% of revenue in FY08, up from 42% in FY07, reflecting less dependence on domestic earnings. The group has declared a final dividend per share of 29 cents, bringing total full year payout to 38 cents – the highest in its history. Management has announced a new base dividend of 12 cents per year (versus 8 cents previously in FY07). Based on yesterday' s closing price, yield is a good 5.6%. Valuations for its peers have come off in recent weeks. Based on 20 times earnings FY09/10 blended earnings, we are lowering our fair value estimate from S$9.60 to S$8.10. With the higher base dividend of 12 cents and the good dividend yield of 5.6%, we are maintaining our Buy rating.

Straits Asia Resources: Buy (OCBC Research, 8 Aug)
Straits Asia Resources (SAR) reported a strong 264% surge in 1H08 net profit to US$56.4m. This was achieved on the back of a 91% rise in group revenue to US$265m and record production of 4.46 million tonnes (mt), which keeps the group well on target to achieve production of not less than 9 mt of coal for FY08. SAR recently announced a resource and reserve upgrade at its Jembayan mine to 138mt and 92mt, respectively. We view this upgrade positively, as an increase in reserves would allow SAR to push for higher output in the future and increase the overall market value of its coal assets. Based on a projected coal price of US$68/ton, cost at US$38/ton and production of 9mt in FY08, we are estimating a significant growth in net profit to US$161m for FY08 from US$28m in FY07. We maintain our Buy rating and target price of S$4.80.

Midas Holdings: Buy (DBS Research, 8 Aug)
Story: 2Q08 results were in line with expectations, thanks to lower than expected administrative costs, as net profit grew by 21% year-on-year (y-o-y) to S$8.6 million on topline growth of 26% y-o-y to S$38.5m. As at half-time, earnings were up by 19% yoy to S$16.2m on revenue growth of 26% yoy to S$75m. A dividend of 0.5Scts was declared, same as last year. Earnings growth continued to be largely driven by the aluminium alloy business, which showed robust growth of 26% in revenue with higher volumes, although gross margin declined due to higher aluminium prices. Looking ahead, we expect higher utilization for the aluminium alloy business to drive growth momentum in the second half of 2008. We are also expecting sequential improvements in contribution from Nanjing Puzhen as they ramp-up production. Factoring in lower gross margins for the core aluminum business, we adjust our earnings estimates for FY08 and FY09 marginally downwards by 7.7% and 6.9% respectively. Nevertheless, we maintain our Buy call as we believe Midas' long-term growth story remains intact but lower our target price due to a lower valuation multiple of 20x FY08/09 earnings, in line with the market's de-rating. Hence, our new target price is S$1.10.

Venture Corporation: Buy (UOBKayHian, 7 Aug)
Venture’s sales was up 3.6% quarter-on-quarter (q-o-q) but down 3.2% year-on-year (y-o-y) to S$972.5m, which is in line with our sales forecast of S$973m. Sales was affected by the weakening US dollar as exchange rate has been declined over 10% yoy. In US dollar terms, the revenue would have increased by 4.6% y-o-y. The improved performance was mainly driven by growth from test and measurement segments with more Original Design Manufacturing (ODM) work secured. The increased sales from networking, communications, computer peripherals and data storage also help to lift up the 2QFY08 revenue. We remain positive on Venture's steady growth in FY08, with a successfully development in diverse and balanced mix of customer, products and technologies. We believe the diversified customer base and technologies would help Venture to grow healthily despite weaker US$ and rise in raw material prices. Venture is moving up the value chain, with more ODM on hand. ODM revenue contribution jumped from 20% of sales in FY07 to 35% currently. Venture trades at only 8 times FY08 PE. We believe the cheap valuation limits Venture's share price downside risk. Our target price is S$13.50 based on FY09 PE of 11 times. Maintain BUY.

Starhub: Buy (DMG Research, 7 Aug)
Full mobile number portability (MNP) appears not to have dented the company's prospects. Despite the fall in earnings, StarHub was able to generate credible free cash flow of S$140m, against S$30m in 1Q08 and S$162m in 2Q07. Cash capex remains at a manageable 9% of operating revenue, while management targets not to exceed 12% by year-end. It is thus able to continue dishing out attractive dividends. In 2Q08, it has committed to an interim payout of S$0.045 per share while maintaining a minimum cash dividend of S$0.18 per share for the full year. Given the weaker than expected 1H08, we have lowered our FY08 earnings by 11% to S$293m. Our target price, based on discounted cash flow, has also been lowered a touch from S$3.10 to S$3.09. This implies a one-year capital return of 10.4%. Including a dividend yield of 6.4%, the 12-month total return for the stock is 16.8%. Maintain BUY.

Synear Food: Buy (UOBKayHian, 7 Aug)
(Synear) released its 2QFY08 results. Turnover in 2QFY08 was flat as expected given the the weak consumption sentiment as a result of the high inflation as well as the Sichuan earthquake. Based on our FY08 earnings forecast of RMB 314 million, the stock is trading at 9.7 times FY08 PE, which is not demanding. Given Synear's leadership in the frozen food industry, strong brand equity and cost pressure alleviation from 2HFY08, we havemaintained our Buy recommendation with a target price of S$0.72.

Cosco Corporation: Buy (DMG, 7 Aug)
A confluence of concerns over possible cancellation orders and rising steel prices has plagued global shipyards in the past week. Cosco has not been spared. This led to a slump in investors' confidence over Cosco shares. A new and sudden change in a key management role – the sudden retirement of President and Executive Director Ji Hai Sheng to be replaced by Mr Jiang Lijun, a shipping industry veteran who became the CEO of Cosco Shipping in 2002 – does not bode well in this weak investor climate, in our view. We believe that the share price is likely to be pressured, at least in the near term. Given that a transition period is required for the new President to spearhead China's largest shipyard, as in the case of any business, it is too quick to ascertain whether there would be any changes made to the operational business model and directives. While we take caution and await the new President's report card, we maintain our earnings forecast and target price at S$3.82, on the back of a strong orderbook of US$7.4b.

Aztech: Sell (DMG Research, 6 Aug)
Aztech saw 2Q08 revenue come in flat at S$61.5m while net profit tanked by 45.9% to S$2.8m. Turnover from its core electronics segment dipped marginally by 2.9% while a combination of higher commodity and oil prices, increased labour costs in China, higher finance costs and a weakening US$ against the RMB took a more pronounced toll on its bottomline. Gross margins fell from 19.2% to 15.5% YoY in 2Q08. Given the tepid outlook, we are downgrading our earnings estimates by 19% to S$11.3m in FY08 and 13.5% to S$14.1m in FY09. At S$0.20, it is trading at 7.4 times FY08, while its SGX-listed comparables are going for 6 times. Assuming it trades down to the industry average, our target price for Aztech will be lowered to S$0.16. Maintain SELL.

Jadason Enterprise: Sell (DMG Research, 6 Aug)
PCB driller Jadason saw 2Q08 revenue plunge by 47% to S$66.4m attributed to a huge decline in equipment sales while net losses suffered was S$1.4m. Net gearing remained high and worsened slightly to 65.3% in 2Q08 from 62.9% during 1Q08. While trading at 0.6x FY08 P/B might make Jadason seem attractive as compared to the sector average of 0.8x FY08 P/B, the valuations of the company are relatively much higher if one were to consider its FY08 P/E of 28.2x. Furthermore, the prospective dividend yield of Jadason at 0.5% is also much lower than the industry average at 5.3% Coupled with the fact that Jadason has been underperforming its industry peers (Elec & Eltek, Multi-Chem and Eucon) fundamentally, we are pegging a 20% discount to the sector average of 0.8x FY08 P/B which translates to 0.6x P/B. With the lower target price of S$0.075 (from S$0.11 previously), we are downgrading our recommendation to SELL. Advocate staying out of this stock due to its murky outlook for 2008 and low trading liquidity.

Li Heng Chemical Fibre Technologies: Buy (UOBKayHian, 6 Aug)
Li Heng has increased its maximum annual production capacity from approximately 92,400 mt to 167,200 mt so that the company saw a 37.9% yoy increase in the sales volume in 1H08, which has in turn led to a 36.6% yoy revenue growth. We expect Li Heng to continue to yield such decent growth in the following quarters on the back of the increased production capacity. We believe it was its substantial market share, strong brand image, as well as superior product quality that made Li Heng better performance compared to most of China's textile industry. However, the company's sales and profitability will inevitably get impacted by the declined demand. Yet, we have already used quite conservative assumptions to estimate its earnings, so for the current stage we would like to maintain our forecasts and BUY recommendation with target price of S$0.845.

Sembcorp Marine: Buy (DMG, 6 Aug)
Sembcorp Marine's (SCM) net profit surged 50.7% year-on-year (+40.4% quarter-on- quarter) to S$128.3m on the back of strong revenue of S$1.4b for 2Q08, a growth of 31.8% y-o-y (+10.3% q-o-q) and increased dividend, interest income and higher contributions from the Cosco Shipyard Group. Profit margins, on a year-on-year comparison, have much to cheer in this challenging operating climate. 1H08 gross profit margin inched up from 10.4% in FY07 to 11.7% in 1H08. Operating profit also saw improvements from 7.9% in FY07 to 8.2% in 1H08. Fundamentals for the offshore market remains strong due to the positive growth in the global demand for oil & gas. Against this backdrop, we remain bullish on the outlook for new rig orders. In addition, the positive outlook for offshore production would see increasing demand for fixed and floating production systems, including Floating Production, Storage and Offloading (FPSO) units. We are keeping our earnings forecast intact. Our target price stays at S$4.99 based on sum-of-the-parts valuation.

China Animal Healthcare: Buy (Phillip Securities, 5 Aug)
China Animal Healthcare (CAH) posted a strong set of 1H08 results which were in line with our expectations. Revenue was up 63.9% from 1H07 to RMB 169.6 million while net profit attributable was up 72.5% from 1H07 to RMB 62.9m. The Group posted gross profit margins of 75.1% and net profit margins of 37.1% for 1H08 which were also in line with our full year estimates. We see the Group's continued strong margins as a sign of its direct sales model's success. While its traditional stronghold of powdered form drugs continued to show strong growth, with revenue up 48.8% from 1H07, we also view the increasing contribution from injection-form drugs and biological drugs very positively. Our investment thesis is formed on the belief that CAH can use its strong distribution network to cross-sell other forms of animal drugs. CAH has continued amassing a strong war-chest, due partly to its quick cash-conversion cycle. We are still optimistic that the Group will be engaging in value-enhancing M&A activities over the next 6-12 months. We have kept our estimates unchanged and we maintain our fair value based on 13 times FY08 PE and 0.5 times PEG. With current price representing 5.8 times FY08 PE, we think this is an opportune time to invest in a market leader of an industry still in its infancy stage.

Cosco Corp: HOLD (DBS Vickers, 5 Aug)
2Q net profit rose 60% to S$129m, on the back of a doubling in revenue to S$1.05bn, above our expectations. At half-time, net earnings account for 44% of our full year forecasts. Gross margins weakened from 30% in 2Q07 to current 23%, while EBIT margin declined from 27% to 20% this quarter, as sales from its lower margin shipbuilding contracts kick in. Sequentially, margins are also lower than the previous quarter, due to higher cost and a higher portion of shipbuilding sales this quarter. We have cut our earnings estimates by 6%(08F) and 4%(09F) due to reduced contract win assumptions, and our target price to S$3.26. Key risks to stock price are a) pressure on margins if steel prices continue to rise, and b) order book may decline if the group fails to win sufficient orders to replace vessel deliveries over the next two quarters. The stock lacks a near term catalyst to perform, given the challenging macro environment. Downgrade from BUY to HOLD.

Cosco Corporation: Buy (DMG, 5 Aug)
Cosco Corporation (Cosco) released a robust set of 2Q08 results largely in line with our estimates. Topline surged 104% YoY (+46% QoQ) to S$1.05b, while gross profit rose 19.5% QoQ (or 60.9% YoY) to S$272.3m. Gross profit margin declined 5.8ppt QoQ to 26.0% in 2Q08 on the back of inflationary pressures and rising steel costs. We believe Cosco would need to keep a closer watch on operations, as this margin will likely face continual downward pressure should operational efficiencies fail to kick in. Nevertheless, other gains offset the higher cost of sales as 2Q08 net profit improved 60% YoY (53% QoQ) to S$128.7m, representing 26% of our FY08 net profit forecast.Our earlier report dated 16 Jul 08 elaborated on Sevan's options and ongoing negotiations to proceed with the construction of the two recently secured LOIs, possibly on turnkey project basis. Pending the finalisation of the terms in this contract, we are maintaining our earnings forecast and target price at S$3.82, based on sum-of-the-parts valuation.

Sino Techfibre: Buy (4 Aug, DMG)
Sino Techfibre is engaged in manufacturing and sales of synthetic leather, with its manufacturing facilities located in Longkou, in Shantong province of China. The Group's much anticipated Pattern Moulding Paper (PMP) production line is by far the most advanced and fully-computerised/automated piece of equipment we have seen in China so far. We are however wary of the past delays in delivery and installation of the first line and hence take a more conservative stance with the PMP contribution going forward. We are confident that its existing Polyurethane (PU) and Microfibre (MFB) lines will continue to contribute positively to earnings growth in the near future. Contribution from Thermoplastic PU (TPU) will help to improve quality and product range, which started testing in April and should begin contributions by end 3Q08. The group also boasts a sound operating cash flow history, a net cash position and no long-term debt. It is also showing good signs of a track record of successfully introducing new products and bringing in strong sales. Therefore, we maintain our Buy recommendation on Sino Techfibre with a 12-month target price of S$1.08.

MAP Technology: Buy (DMG, 1 Aug)
MAP Technology, the subsidiary of Taiwan-listed Min Aik Technology, is an integrated data storage service provider serving the in the hard disk drive (HDD) sector. It is mainly involved in the manufacture and sale of precision stamping products and die-cut components and provides electronics manufacturing services solutions. According to market research firm IDC, appetite for digital storage capacity will continue to fuel HDD demand and revenue. The HDD industry is also envisioned to post consecutive years of record-breaking shipments and revenue from 2007 to 2012. IDC forecasts that worldwide shipments are slated to increase by 13.4% and 12% in 2009 and 2010 respectively. MAP Technology has the capability of high volume production to service its clients. Currently, the company has 24 precision stamping presses, two tumbling lines and two EN-plating lines for its precision stamping business; seven assembly lines and four SMT lines for its EMS solutions business and three die-cut lines for its die-cut business. We forecast net earnings to increase 46.1% to US$13.2m in FY08 and 39.8% to US$18.5m in FY09 on the back of a revenue hike of 51.2% to US$222.9m in FY08 and 30.2% to US$290.4m in FY09. We have also forecasted dividends to come in at US$0.021 per share and US$0.03 per share in FY08 and FY09 respectively based on a dividend payout ratio of 60% which we believe is sustainable. Applying a PEG (P/E-to-growth) of 0.85 times or 10.5 times prospective earnings, we arrive at a target price of S$0.575. Coupled with the 6.1% potential dividend yield and the expected capital return of 19.8%, this translates into an upside of 25.9% for its share price.

Allgreen Properties: Buy (DBS Vickers, 1Aug)
Allgreen's 2Q08 topline fell 39% year-on-year (y-o-y) to $74.1m while net profit declined 36.5% to $17.2m. This was due to lower revenue from its development properties as well as higher finance costs from an increase in borrowings for its overseas investments in China and Vietnam and for land purchases in Singapore. The drop in revenue was partially offset by improved returns from its investment portfolio properties at Great World City, Tanglin Mall and Traders Hotel – which saw higher rental or room rates. Allgreen has indicated that it believes the poor sentiment in the physical market will linger for the rest of the year and 2H08 earnings will thus be lower than 2H07 earnings. Given this, we do not expect the company to be launching any of its new development projects in 2H08. As such, we have lowered our FY08 earnings to reflect a further delay in launches and construction. Valuations continue to be undemanding for Allgreen, which is the key premise for our buy call. It is currently trading at a 33% discount to its 1H08 book value of $1.38 and at an even steeper 48% discount to its revised RNAV of $1.78. We maintain our Buy call at a revised target price of $1.25, based on a 30% discount to its RNAV.

Pacific Andes Holdings: Buy (OCBC Research, 1 Aug)
Pacific Andes Holdings is set to meet our FY09 estimates largely supported by an increase in catch volume. We met with management recently for an update and the Total Allowable Catch (TAC) for this year has increased from 1.3m to 1.4m tons. In addition, average selling price has improved about 10% year-on-year so far this year. Management has redeployed two vessels to the South Pacific starting this month and the full impact will be felt in the following year. This is another strategic move to garner a portion of the market in the South Pacific for Chilean Mackerel. In Peru, we expect cost-savings to kick in from next year with the implementation of the fishing quota system as quotas can be transferred to other vessels, allowing the group to better manage its fishing asserts. Valuations are attractive at the present level and current weakness in share price presents a good opportunity to hold a defensive and good yield stock. We reiterate our BUY rating with fair value estimate of 80 S cents.

Keppel Corporation: Buy (DMG, 1 Aug)
Keppel Corp's 2Q08 results came in line with expectations. On the back of 2Q08 revenue growth of 7.7% year-on-year to S$2.6b. The group delivered a PATMI of S$299.2m, an increase of 15.8% y-o-y (+14.4% quarter-on-quarter). Higher revenue was reported by all divisions: O&M (+30% QoQ), Infrastructure (+18%) and Investments (+122%) - except for Property, which saw a decline of 29% due to the absence of new launches in dampened market condition. This flowed down to the PATMI level, which saw improved contributions from O&M (19% QoQ), Infrastructure (11%) and Investments (49%), but a drastic drop from the Property division (-44%). Against this backdrop of a challenging global economic condition, we believe that Keppel's conglomerate business model would be largely dragged down by its property division. While no changes have been made to our FY08F estimates, we have trimmed our FY09 revenue and PATMI by 2.3% and 5.3% respectively. Our property analyst has reduced Keppel Land's target price to S$6.09 (from S$8.08 previously). As such, our target price for Keppel Corp is cut to S$12.21 (from S$12.76) based on sum-of-the-parts valuation. As this implies a potential upside of 14.5%, we thus maintain our Buy rating.

China XLX Fertiliser, Buy (DMG, 1 Aug)
China XLX announced a 20.9% year-onyear (y-o-y) increase in 2Q08 revenue. A large part of its success in 2Q08 was because of its higher average selling prices (ASP). The ASP of urea increased by 9.1% YoY to RMB1,721/tonne in 1H08. ASP for methanol and compound fertiliser for 1H08 increased by 35.8% and 35.7% YoY respectively. Sales for urea and compound fertilizer increased by 5.9% and 40.9% respectively in 1H08 as compared to 1H07. We maintain Buy with a price target of S$1.17.