SMRT CORP
PRICE - $1.77
TARGET - $1.90
SMRT reported strong ridership numbers for February 2008. Ridership grew 14% YoY. Sequentially ridership was down 10% from January mainly on the back of seasonality. A strong economy and higher taxi fares seem to have driven the ridership numbers. Typically following a taxi fare hike, taxi usage drops sharply, followed by a gradual pickup over 3-6 months - so some of the gains related to the taxi fare hikes could moderate over the next 3-6 months. Our discusssions with the taxi companies suggest that drivers are seeing a gradual pickup in volumes after a steep fall in January post fare hike. Train ridership should continue to remain reasonably strong even if the economy cools down as the government pushes for increased use of public transport. The rollout of new retail outlets in stations continues, which should again support earnings growth. The stock offers a 4% dividend yield and dividend payout is likely to increase beyond 2011 once the current midcycle upgrade of trains is completed, as this would lower capex needs by about 25%. Maintain BUY.
– Deutsche Bank (10 Mar)

SWIBER HLDGS
PRICE - $2.00
TARGET - $3.49
Swiber announced that it has won a Letter of Intent for a huge offshore EPCIC contract, worth US$127m. This latest contract has brought Swiber’s y-t-d orders win in 2008 to US$193m, vs. our assumption of US$400m for 2008. Gross order book as of now is about US$477m. It reinforces our view that Swiber will be able to leverage on its enlarged capabilities and higher quality customer base (since 4Q07) to get bigger value projects as the main contractor. This announcement is also Swiber’s first offshore EPCIC contract in India. Note that Swiber has previously gotten two offshore marine support contracts from BG Exploration and Production India Ltd in late 2006 and early 2007, and this relationship has definitely been strengthened through its offer of higher valueadded offshore EPCIC services in the latest LOI. We reckon that not all of last September’s batch of offshore EPCIC contracts has been awarded yet, and there could be more orders flow in 1Q08. Maintain BUY.
– DBS Vickers (10 Mar)

YONGMAO HLDGS
PRICE - $0.36
TARGET - $0.76
Yongmao is already a beneficiary of the current boom in construction and infrastructure spending globally. With billions of dollars expected to be poured into infrastructure development and construction globally in the next five years, the outlook for crane manufacturers is excellent. Given Yongmao’s increased business and strong order book, operating cash flows are projected to remain healthy. Funds raised from its recent IPO on the SGX are timely for capex on its new manufacturing facility. We project a net cash position for the next three years. Our target P/E is also at a significant 60% discount to valuations for its closest peer, Changsha Zoomlion (19.8x CY09 P/E), to factor in Yongmao’s shorter operating history, smaller market capitalisation and lower trading liquidity. Initiate with OUTPERFORM.
– CIMB (10 Mar)

STX PAN OCEAN CO
PRICE - $2.86
TARGET - $3.50
Management expects the current BDI rebound to continue driven by accelerated iron ore cargoes and grain harvest. Medium term, the industry outlook remains positive with continued port congestion and longer tonne miles till 2010. STXPO forecasts 2008 average BDI to range from 7k-8k and 1Q08 results are likely to be stronger QoQ due to time lag for revenue booking. While STXPO is highly leveraged with a charter fleet 5x of owned fleet, almost 44% of the fleet (owned and long-term chartered) have a BDI breakeven of less than 5,000, providing some cushion should rates decline. Tighter credit conditions have been a net positive too due to lower LIBOR despite higher spreads. Our new target price is derived using 2.0x FY08 target P/B, based on 15% discount to average FY08-09 ROE/COE of 2.4x. Maintain OUTPERFORM.
- Credit Suisse (11 Mar)