StarHub Ltd: Eyes 10% revenue growth in FY08

Summary: StarHub Ltd posted a good set of 4Q07 results, with revenue up 13.9% YoY and 5.0% QoQ to S$538.8m, aided by good performance from all its business units. Although net profit fell 30.5% YoY (+21.0% QoQ) to S$98.4m, we note that the year-ago quarter was boosted by S$57.6m tax credit versus S$6.7m in 4Q07 (none in 3Q07). StarHub also declared a final dividend of S$0.045/share (versus S$0.035 in 4Q06), bringing the total dividend for the year to S$0.16 (versus S$0.115 in FY06). For FY08, management remains confident that it can sustain revenue growth at 10%, and hold EBITDA margin on service revenue at about 33%. It also aims to pay a minimum cash dividend of S$0.18/share, or around S$0.045 per quarter. In line with the latest guidance, we have adjusted our FY08 estimates by around 4% higher. Again, we see StarHub as a good defensive stock, backed by an attractive dividend policy, hence we maintain our BUY rating with a revised fair value of S$3.51.

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Tat Hong Holdings Ltd: 3Q08 results indicated signs of slower growth

Summary: Tat Hong Holdings Limited (THH) turned in a mixed bag of 3Q08 results yesterday. Though revenue increased 17% YoY to S$157.9m and net profit rose 20% YoY to S$21.2m, revenue slipped 1.4% QoQ and net profit fell 7.3% QoQ. We also note that the total fleet tonnage has decreased 3.5% from 43,416 tonnes in 2Q08 to 41,906 tonnes in 3Q08, implying that THH is facing a limitation in expanding fleet tonnage capacity in this tight equipment supply market. Nonetheless, we believe that there is still much to cheer about as a slew of local development projects are planned in 2008, although we foresee lower utilisation levels and that rental rates are likely to reach a plateau soon. In view of this, we are trimming our forecasted revenue and net profit estimates. We have not factored in a potential one-off gain from the listing of Fushun Yongmao in our FY08F valuations. Rolling forward our valuation parameter to FY09F earnings, our fair value estimate is now S$3.44 (from S$4.02 previously). Maintain BUY.

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SSH Corporation Ltd: Stellar set of 1H08 results

Summary: SSH Corporation Ltd (SSH) turned in a stellar set of 1H08 results yesterday. Both revenue and gross profit surged 48% YoY to S$114.7m and S$29.2m respectively. Consistent with that of 1H07, gross profit margin maintained at 26%. Stripping off the one-time extraordinary gains of approximately S$1.7m, SSH's recurring net profit of S$10.8m came close to our half-year expectations of S$10.6m. SSH has proposed an interim dividend of 0.7 cent (tax-exempt) per share. We believe that SSH should not have any problems maintaining our dividend payout projection of at least 1 cent for FY08, translating into a decent yield of at least 3.2% for FY08. We are maintaining our FY08 and FY09 earnings estimates. However, with the vulnerability in the global market sentiment, we are lowering our valuation parameter to 12x. Our fair value estimate is trimmed to S$0.54 (from previously S$0.60) based on 12x FY09 forecasted earnings. We reiterate our BUY rating.
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Rotary Engineering Limited: Seals US$62m deal to build storage tanks in Saudi Arabia

Summary: In our recent report dated 31 January, we had previously mentioned that Rotary Engineering Limited (Rotary) was in the running for several projects, both locally and in the Middle East. In line with this, Rotary announced yesterday that its join venture company, Petrol Steel Co Ltd (Petrol Steel) had secured a US$62m deal with Saudi Kayan Petrochemical Company to construct 24 tanks for its Saudi Kayan Petrochemical Complex in Al-Jubail, Kingdom of Saudi Arabia. Work would commence soon and is expected to be completed by end 2008. We view this award positively, as this is Petrol Steel's first significant win. We await Rotary's FY07 results on 26 Feb 2008 for more updates. In the meantime, we maintain our BUY rating for Rotary, with a fair value estimate of S$1.48.

Silverlake Axis: Good set of 2Q08 results

Summary: Silverlake Axis Limited (SAL) reported a good set of 2Q08 results as expected last night, with revenue up 30.3% YoY at MYR50.1m, while net profit jumped 78.4% to MYR44.3m, thanks to its recent SIBS licensing expansion into non-banking financial services sector. As a result, SIBS licensing contributed nearly 73.9% of total revenue, and because of its high margin, contributed 83.2% of gross profit. We were also heartened to see an associate contribution of MYR3.0m from Unifisoft, which marked a turnaround from a MYR0.5m loss in 1Q08. At the half way mark, SAL's revenue rose 67.6% to MYR107.6m, meeting nearly 58.1% of our FY08 estimate, while net profit jumped 69.5% to MYR76.9m, or 71.1% of our FY estimate. SAL has also declared an interim dividend of S$0.015/share, versus S$0.0075 last year. We will be meeting with management for an update later. For now, we retain our BUY rating and S$0.75 fair value.

Singapore Shipping Corporation Ltd: Weak set of 3Q results

Summary: Singapore Shipping Corporation Ltd (SSC) released a weaker set of 3Q08 results YoY as expected, with revenue down 52.1% YoY to S$3.1m due to the cessation of the manning service from January 2007 for third party vessels. Operating profit margin was relatively stable at 12.1% in 3Q08 versus 12% in 3Q07. While net profit fell by a steep 91.1% YoY to S$0.5m in 3Q08, we note that it was mainly due to a S$5.3m gain from the disposal of associated companies in 3Q07. On the balance sheet front, SSC's cash balance stands at S$38.1m as at Dec 07, attributable to Dec's special interim dividend payout of approximately S$52.3m (S$0.12/share). Hence, we revise our net assets projection for FY09 to S$94.9m, from S$105.6m previously. With SSC sourcing for suitable vessels to expand its current fleet and operations and all 3 vessels still out on charter, we expect organic growth in the near to medium term to remain stable based on existing operating assets. As such, we are maintaining the P/B ratio of 1x and our new fair value for SSC is S$0.22 (S$0.32 previously). As SSC is currently trading around S$0.39, we are maintaining our SELL rating.