DBSVickers Report - 04 Dec 2007

See Hup Seng Limited Post conference takeaways

Story: See Hup Seng’s earnings are set to grow strongly in 4Q07. The outlook for 2008 remains strong, underpinned by Keppel Corp’s strong order book of S$13-14bn, capacity expansion that will come onstream by 1Q08, and the continuing strong outlook for the offshore, marine and construction sectors.

Point: The market was largely disappointed with the weak showing in 3Q that was caused by delays on tank coating jobs. We expect a strong showing for the tank coating segment in 4Q, underpinned by one project that has since been completed and WIP on a further three projects.

Relevance: The share price has shed 30% since SHS released results on 6 November. We believe that the current weakness is a buying opportunity as SHS is a beneficiary of the strong demand for FPSOs and offshore equipment as well as construction steel. We are rolling over our valuation using FY09 earnings, but using a lower 16x multiple. Maintain Buy with an unchanged TP of S$1.18.