Brokers' Take

Nam Cheong Ltd | Buy

Nov 12 close: S$0.42

Target price: S$0.60

DBS Group Research, Nov 12

Q3 2014 net profit was up 113 per cent year-on-year and 100 per cent quarter-on-quarter to RM126 million in Q3 2014, significantly better than our estimates. This is Nam Cheong's strongest quarter to date since its listing in 2011. The outperformance was driven by superior shipbuilding gross margin of 24 per cent in Q3 2014, as well as low marketing expenses. We raise our earnings estimates for Nam Cheong by 27 per cent and 23 per cent for 2014/2015 respectively; as we believe we were previously too conservative on margins and revenue recognition. Maintain our "buy" call on Nam Cheong with a higher target price of S$0.60. We reckon the share price decline in recent weeks amid oil-price weakness is an overreaction and offers a good entry point for the long term. Its share price is well supported by a decent dividend yield of 3.7 per cent, based on 25 per cent payout ratio.

Swissco Holdings | Buy

Nov 12 close: S$0.85

Target price: S$1.35

CIMB Research, Nov 12

WE view Swissco's latest accommodation rig deal as a better one, with a higher day rate of about US$45,000 and payback of capital expenditure during the first tranche of contract. Swissco and its 50 per cent stake joint venture, Union Offshore, have clinched a 5+2 year service rig contract worth US$115 million in Asia-Pacific. It could also alleviate some fears over the single-customer risk of Pemex as the company starts to diversify its exposure beyond Mexico. We keep our EPS forecasts intact as the contract falls within our expectations for 2015 contribution. We keep our "add" call and target price, still based on 9 times 2016 earnings in view of the superior growth.

Boustead Singapore | Buy

Nov 12 close: S$1.865

Target price: S$2.40

Phillip Securities Research, Nov 12

FIRST-HALF results were excellent. Core-profitability continued to improve. We are on course to meet our full-year earnings forecast of at least S$75 million (with the second half usually stronger). The key takeaway though is not just that results were good, but that we raise next financial year's earnings forecast to S$87 million (EPS of 16.9 cents from 14.7 cents) due to a slew of recent order wins for the design and build business, and energy engineering business. Outstanding orderbook is at a very healthy S$441 million. The upside catalyst would be Boustead's potentially transformative partnership with Abu Dhabi Investment Council. Maintain "buy", with an unchanged target price of S$2.40.

Compiled by Cai Haoxiang

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