CIMB Report - 25 Feb 2008

What’s on the table

SembMarine (S$3.53) - 4QFY07 results - Margin expansion still on the cards SMM’s 4Q07 net profit (S$0.8m) was much below our expectations (S$68m) and consensus (S$155m) due to higher-than-expected tax provisions from the conservative treatment of tax credits for written-off forex losses in 4Q07.

Core earnings of S$122m were 13% below expectations due to weaker-than-expected Brazil associate contributions. A key positive was margin expansion. Management expects 2008 order wins to be stronger than in 2007 (S$5.4bn) from offshore/conversions and semi-subs.

We upgraded our order-win assumptions to S$5bn from S$4bn and raised our FY08-09 earnings estimates by 1-4%. Accordingly, our target price rises from S$4.58 to S$4.90, still based on blended valuations. Maintain Outperform.

Quick Takes

· Fibrechem Tech (S$0.91) - 4QFY07 results - Higher material costs show up
· Capitaland(S$6.1 -4Q07 results- Decent results but weighed-down valuations
· Meiban Group (S$0.39) - 4QFY07 results - Still cheap
· Petra Foods (S$1.29) - 4QFY07 results - Short-term pain
· Dry Bulk Shipping - Baosteel strikes agreement with Vale Corporate News
· China Hongxing net profit surges 94% for FY2007 to Rmb416.5m
· C&G Industrial recorded 18.3% gross profit growth to Rmb53.2m
· Ooi family plans to hold on to Kim Eng stake
· Unifiber inks deal with new partner