Money Talk: Ezion, SingPost, Sembcorp

SINGAPORE - Stay up to date on market chatter with our picks of the latest broker research reports, compiled by The Straits Times Money Desk.

1. Ezion Holdings

Broker: OSK-DMG

Ezion reported a healthy PATMI (profit after tax and minority interests) f US$49.2 million for the thrid quarter of 2014 (3Q14) - 29 per cent up year-on-year (YoY), 8 per cent up quarter-on-quarter (QoQ) - as two new service rigs have begun work, with six more to join the fleet in 4Q14.

We believe market concerns over contract renewals and operational issues are overdone.

Ezion is still one of the highest-growth companies in the sector with FY15/FY16 forecast price to earnings ratio of only 6 times and 5 times respectively, in contrast to its contract durations of 3-7 years up to 2022.

Maintain BUY with target price raised to $2.65 from $2.45, implying a 79 per cent upside.

2. Singapore Post

Broker:OCBC

SingPost reported a 8.1 per cent YoY rise in revenue to $220.3 million and a 5.5 per cent increase in net profit to $37.6 million in 2QFY15, such that 1HFY15 revenue and net profit accounted for 48 per cent and 50 per cent of our full year estimates, respectively.

In 2QFY15, mail accounted for 56 per cent of total revenue, the lowest the group has seen in its history, underscoring SingPost's efforts to reduce reliance on the mail business. Meanwhile ecommerce-related revenue for 1HFY15 accounted for about 27 per cent of total revenue, representing a 20 per cent YoY growth.

It has close to 1,000 ecommerce customers across the group and ecommerce package volumes registering double-digit growth YoY.

Maintain BUY with fair value estimate raised to $2.17 from $2.09 previously.

3. Sembcorp Industries

Broker: CIMB

3Q14's net profit of $197 million is broadly in line with our expectations and consensus. With Marine expected to be stronger in 4Q14, we consider 9M14's net profit (71 per cent of FY14 forecast) to be in line.

Singapore Utilities' earnings surprised positively thanks to additional capacity/offtake from centralised utilities - steam, gas, water and on-site solid waste, which formed 75 per cenr of earnings. Power spark spread remained steady in 3Q14, with a minimal 3 per cent dip, suggesting that power prices could have bottomed out.

Beyond Singapore, we look forward to India's first 660MW power plant to start operations by end-14 with 900MW PPA secured to-date.

We adjust our EPS (earnings per share) by -3-6% for FY15-16 and lower our target price, still based on SOP, to account for our revision on SMM's forecasts and target price.

Maintain ADD with a lower target price of $4.69 from $5.85