Tee International: Order book explosion

Summary: TEE recently announced a very large contract win from the Marina Bay Sands Integrated Resorts Development for electrical installation for the North and South Podiums worth S$109m, bringing TEE's total order book to approximately S$182m. As a pre-qualified contractor for this project, TEE has an edge over the other contenders for future contract works with Sands. TEE intends to launch the Rambai Road development on 12 April 08 and has indicated they plan to hold off all further launches till 2H08 based on the developments in the local property market. TEE has proposed a bonus issue of 3 bonus shares for every 20 shares together with a proposed warrants issue of 1 warrant for every 5 shares held. However, management has not fixed a date for book closure. We are raising our net profit projection for FY08 to S$4.2m taking into account the new contact win from Marina Bay Sands. The bulk of the earnings from the new contract would come in during FY09. We are also raising our fair value estimate from S$0.51 to S$0.525 based on blended 13x earnings. This presents an estimated 13% upside from current price, and hence we are upgrading TEE to a BUY. (Ritesh Menon)

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Soilbuild Group Holdings Ltd: Building up for more growth

Summary: Soilbuild Group Holdings Ltd (Soilbuild) put up a record performance in FY07, with earnings surging 634% to S$52.4m. The good performance was partly due to its choice of target market. By targeting the premium residential market, Soilbuild lifted its gross profit margin by 20.6ppt to 33.1% in FY07. We remain positive on this market segment, and believe that the relatively lower price elasticity of the buyers in this segment should allow Soilbuild to pass on its rising construction costs. Soilbuild's pipeline of pre-sold projects amounted to approximately S$511m, to be recognised in FY08 and FY09. This suggests that its FY08 sales could more than double that of FY07 even without factoring in revenues from its business space and new projects. Management is building up its recurring income stream from rental of business spaces, and is confident that demand for business space properties will be buoyed by strong foreign investment commitments into Singapore. We do not have a rating on the stock. (Lee Wen Ching)

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Eu Yan Sang International Ltd: Another step towards quality assurance

Summary: Eu Yan Sang International Ltd (EYS), together with Agrifood Technologies, an arm of the Agri-Food and Veterinary Authority (AVA) of Singapore, have come together to introduce a certification standard for Traditional Chinese Medicine (TCM) herbs. The purpose of this certification is for consumers to obtain independently-verified assurance of the quality of herbs that they are purchasing. While this latest development will not have a material financial impact on EYS, the company will enjoy intangible benefits in the form of brand awareness, and will be able to justify any price increments it may be planning. It may also capture a larger market share as consumers turn to safer and better quality products in light of food-safety concerns. We maintain our HOLD rating on EYS, with a fair value estimate of S$0.535. (Lee Wen Ching)

NEWS HEADLINES

- Keppel Corp has won a S$74.8m turnkey contract to design and build a waste-to-energy cogeneration plant for a paper-mill in Sweden.

- Banyan Tree hopes to close a fund aimed at raising up to US$400m for investments in Indochina by the end of this year.

- Neptune Orient Lines carried 10% more containers on its ships in the four weeks to March 7 compared with the same period a year ago.

- The past three months have seen S$105b or 13.2% wiped off the stock market value of Singapore-listed companies.

- The S$162.8m collective sale of Makeway View in the Newton area has been rescinded due to higher than expected development charges.

- Total loans made by Singapore banks hit S$241.8b at the end of February, up 21.9% YoY – the fastest pace of expansion since May 1995.

- The Urban Redevelopment Authority has put a 1.77ha hotel site in Balestier Road on the market.

- Vega Co, a wholly-owned subsidiary of The HSBC Private Equity Fund 6, is offering to buy Sing Lun Holdings for S$119.6m or S$0.46 per share. Its stake is now 71.32%.

- Pokka Corp posted a more than seven-fold jump in full-year net profit to S$7m thanks to better profit margins and double-digit revenue growth.