Keppel Corporation Ltd: Record performance

Keppel Corporation Ltd: Record performance

Summary: Keppel Corporation (Keppel) yesterday posted unprecedented
full-year net profit after tax of S$1.03b (+36.6% YoY) buoyed by a surge in
revenue to S$10.4b (+37.2%) for 2007. All business segments performed
better. The contracts secured by Keppel O&M tipped the S$7b mark for a
second year, giving rise to a net order book of S$12.2b and extended
earnings visibility into 2011. However, there are growing threats of margin
erosions and forex hedging concerns as a result of cost escalations and
weakening of the USD. Keppel proposed final and special dividends of a
total of 30 cents. In view of potential margin erosions and slowdown in
order momentum, we are revising down our FY08 earnings estimates to S$963m.
Based on the current market weakness, we derive a fair value of S$14.80
(from S$17.10 previously) from sum-of-the-part valuation. We reiterate our
BUY rating on Keppel.

Chartered Semiconductor: Good headline 4Q07 numbers

Summary: Chartered Semiconductor posted its 4Q07 results this morning, with
revenue just down 0.6% QoQ (+4% YoY) at US$352.6m, while net profit (before
accretion to preference shareholders) came in at US$5.9m (+9.0% YoY, down
94.9% QoQ). Chartered had earlier guided for revenue to fall 2-6% QoQ to
US$334-346m, while net profit is expected to come in at US$1-11m. We were
looking for 4Q07 revenue of US$346.5m and net profit of US$2.9m. Chartered
attributed the better top-line number to strength in the communications
sector (+74.5% YoY, +16.8% QoQ), which made up for weakness in computer
(down 57.5% YoY, -25.5% QoQ). Nevertheless, we note that the bottom-line
strength came mainly from a tax credit of US$14.6m, and the foundry
actually made a PBT loss of US$8.7m, versus a profit of US$6.3m in 4Q06 and
US$7.1m in 3Q07. Going forward, Chartered is looking at a pretty upbeat
1Q08, as it is guiding for revenue to grow 2-6% QoQ to US$361-373m and net
profit to come in flat (+/- US$5m). Utilization rate is also expected to
improve from 81% in 4Q07 to 82-88%, although ASPs could down 2-6% to
US$845-885/wafer. We will be making some adjustments to our numbers after
the conference call this morning. For now, we retain our HOLD rating.


GP Batteries: Another loss in 3Q08

Summary: GP Batteries (GPB) posted another set of disappointing 3Q08
results. Although revenue rose 28.0% YoY to S$257.9m, it was down 11.5%
QoQ. Nevertheless, management noted that sales across all markets
registered growth, particularly Europe and North & South America, where
growth in each market rose over 40% YoY. However, it was not enough to
prevent GPB from slipping into the red to the tune of S$2.1m from a net
profit of S$3.0m in the year ago period. For 9M08, the net loss came up to
S$7.7m versus a net profit of S$8.0m in the year-ago period, despite a
26.9% rise in revenue to S$779.1m. Although revenue met nearly 90% of our
FY08 estimate, our previous earnings estimate of S$5.7m looks unlikely to
be met. We will be revising down our earnings estimates both for FY08 and
FY09 after our meeting with management later. For now, we retain our SELL
rating.


NEWS HEADLINES

- CSC Holdings Ltd has won 4 foundation works contracts totaling S$118m in
the past weeks, including one for the Marina Bay Financial Centre.

- The Hour Glass Ltd's 3Q net profit jumped 58% YoY to S$8.2m, with sales
rising 22% to S$132.2m.

- The Strata Titles Board overturned Allgreen Properties' S$34m purchase of
condominium site Regent Garden due to problems with the valuation of the
site.

- CapitaLand will issue S$1.3b of 10-year convertible bonds. Proceeds will
be used to refinance its existing borrowings, finance new investments and
for working capital.

- Brazil's largest energy company Petrobras will lease 36% of Chemoil's
newly opened Helios Terminal.

- Datacraft reported a 51% YoY rise in 1Q net profit to US$9.4m on the back
of a 35% growth in revenue to US$173.2m.

- Australian regulators have finalized their agreement with SP Ausnet for
the operation of its transmission network in Victoria, securing over 40% of
the company's total revenue for the next 6 years.

- Azeus Systems warned of substantially lower profits compared to FY07, as
its gross margin was impacted by intensive price competition in the Hong
Kong public sector market.

- Fragrance Group saw net profit more than doubled from S$14.8m to S$30.4m.

Please refer to the full report for more information and additional
disclosures.