Money Talk: StarHub, UOL Group, Ezion Holdings

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. StarHub: Uninspiring FY14 start

Broker: OCBC

StarHub posted 1Q14 revenue of $571.4 million, down 1.5 per cent year-on-year and 6.9 per cent quarter-on-quarter, meeting just 23.5 per cent of our full-year forecast. Net profit fell 7.7 per cent year-on-year to $84.2 million, or 22.4 per cent of our FY2014 estimate.

StarHub declared a quarterly dividend of $0.05 per share as guided. Going forward, StarHub has kept its previous guidance for FY2014, and continues to see intense competition in the Broadband segment; it is also seeing erosion in its voice and SMS usage in its main Mobile business.

For now, we opt to keep our estimates unchanged, but we will be looking to trim them if Q2 results show no signs of recovering.

Our fair value also remains unchanged at $3.81; and with no likelihood of a special dividend this year, we maintain our Sell rating on the stock.

2. UOL Group

Broker: CIMB

UOL's Q1 net profit rose 69 per cent year-on-year, mainly due to a land sale in Kuala Lumpur. Excluding this, core net profit was down 14 per cent year-on-year, broadly in line at 19 per cent of our FY2014 estimate.

While the hotel and investment property segment showed healthy growth, it was not enough to offset the fall in development earnings.

We continue to like UOL for its recurring income and track record of timely capital deployment. A cleaner structure post the SingLand privatisation and potential redevelopments are catalysts.

We keep our Add call with a slightly lower target price of $8.41, ($8.44 previously), largely due to lower fair value of its UOB stake that more than offset the positive impact of its recent Prince Charles Crescent land purchase.

3. Ezion Holdings

Broker: OSK-DMG

Ezion's first quarter was strong with core net profit up 70 per cent. Four rigs have been delayed for an average of three months each, but two of the four could see significantly higher long-term charter rates as a result.

Ezion repurchased its first liftboat from the sale-and-leaseback arrangement, which will add to earnings and also save on leasing costs. This mitigates the effect of the delayed rigs on FY2014 net profit.

Ezion is now targeting stronger growth with its placement proceeds, and has identified Malaysia as a key growth market. We believe that after taking a breather in FY2014, growing by "only" 49 per cent, Ezion's growth should accelerate to 55 per cent in FY2015 with potential for upward revision.

Ezion remains one of our top picks. Maintain Buy with a target price of $3.00.

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