YEO KEE YAN
DBS Equity Research
For the DBS research team, Ezion and City Developments Limited (CDL) were among the disappointments of last year.
Said Mr Yeo: "We had liked Ezion because of its resilient and prudent business model, along with rising liftboat demand to drive growth.
"But sentiments soon turned poor across the offshore and marine sector amid falling oil prices. Ezion's earnings were also affected by its vessel downtime and repair costs."
On Ezion, we continue to like its prudent business model. Its recently announced strategic partnership with a state-owned enterprise in China to tap the country's fast-growing wind-farm energy sector is also a plus.
MR YEO KEE YAN
Ezion was among those hit last year when crude benchmark Brent futures fell some 36 per cent. Its shares fell 46 per cent to end 2015 at 61 cents, underperforming the Straits Times Index by 33 per cent.
In the property sector, CDL also saw its shares pare down 26 per cent last year to $7.65, 12 per cent lower than STI's performance.
Despite the market slowdown, triggered by the Government's cooling measures, DBS liked CDL for its strong balance sheet and diversified earnings base that comprises commercial and hotel properties. Its South Beach mixed-use project - to be completed this year - will be a revenue driver.
However, its shares were still affected as the Government continued to play down hopes of lifting the cooling measures, Mr Yeo said, adding that the decision by substantial shareholder Aberdeen Asset Management to reduce its stake also had an impact.
But DBS maintains its positive view on the two counters for this year. "On Ezion, we continue to like its prudent business model. Its recently announced strategic partnership with a state-owned enterprise in China to tap the country's fast-growing wind-farm energy sector is also a plus. We expect Ezion's earnings to have bottomed out in the fourth quarter of 2015," said Mr Yeo.
He added that CDL's outlook is also bright as its hotel operations will offer cash-flow stability, given that up to 69 per cent of its revenue comes from the hotel and commercial portfolio.
Maybank Kim Eng
Small caps and telcos analyst
EASING OF CURBS LIKELY
The decline in physical property prices and curbing of speculation in 2015, as well as the edging up of the interest rate cycle, support our view that there could be an easing in cooling measures, especially for foreigners and at the high end of the market.
MR GREGORY YAP
Last year, Maybank Kim Eng had a strong focus on the property sector, and was a proponent of the view that developer shares would benefit from potential privatisations because of the qualifying certificate (QC) scheme.
Under the QC regulations, listed developers are required to complete and sell all units in a project within seven years after the land is bought. Developers who fail to do so will have to pay to extend the deadline for unsold units.
Maybank Kim Eng believed that the developers struggling to move units, such as Wing Tai Holdings, would consider privatisation to avoid the QC charges, a move that would greatly boost share value. That, however, did not become the reality.
Wing Tai lost about 17 per cent between April and the end of December as the initial market euphoria surrounding the privatisation talks fizzled out.
Mr Yap thinks the scenario may yet pan out this year.
"The arguments for privatisation remain valid as valuations of stocks remain cheap. Wing Tai faces QC penalty deadlines in April and December on two completed but largely unsold projects. We think the company could at least consider privatising the company to avoid paying the charges."
Mr Yap is also hopeful that the Government may move to unwind some cooling measures this year after disappointing market expectations last year.
"The decline in physical property prices and curbing of speculation in 2015, as well as the edging up of the interest rate cycle, support our view that there could be an easing in cooling measures, especially for foreigners and at the high end of the market," he said.
"It didn't happen in 2015, which explains the lack of upward movement in stock values, as predicting timing is always difficult. But we think that the main metrics for the Government to consider lifting are moving in the right direction."