Small Cap Offshore looking good

The offshore sector is looking good, with earnings expectations of up to 34% over the next 2 years, coupled with "efficiently priced" valuations of 7.8 times forward price-to-earnings ratio.

CIMB is bullish on the following counters:

Company	Price Target	Current PE
ASL Marine	0.85	8.7
Ezra	1.55	15.1
Swiber	0.84	10.0

Trading activity has increased lately, and I am very excited. ASL has gone 77% since Oct 2012, Ezra 36% since Nov 2012 and Swiber 21% since Nov 2012. ASL is in an established trend, whereas Ezra and Swiber are just breaking out into new uptrends. Watching closely.

DBS' picks for 2013

Themes to drive performance in 2013 : i) China offers the brightest spot,
urbanisation is the buzz word; ii) Hunting for yield + growth; iii)
Cyclicals trading on bombed out valuations

i)Beneficiaries riding on China's recovery are Midas, Capitamall Asia, Perennial China Retail Trust, Sound Global, United Envirotech and China Merchants.

ii)We focus on yield plays offering growth, either organically or via acquisitions - Mapletree Commercial Trust, Far East Hospitality Trust and China Merchants. Hutchison and
Religare offer the highest dividend yield with upside growth potential. Ezion stands out among the highest 3-year EPS CAGR of 41% in our coverage, yet trading on undemanding PE of 10x. Petra should be re-rated as a pure consumer play with a leading market position in fast growing Indonesia,
after divesting its cocoa ingredients business.

iii)Bomb out cyclicals. Higher risk appetite will drive capital inflows intocyclical stocks, ahead of recovery. NOL and Jaya are cyclical recovery plays, riding on improved freight rates, cost control measures and strategic repositioning. The worst is over for Wilmar, earnings recovering
on capacity expansion in Indonesia, improved refining margins in Malaysiawhile crushing margins have stabilised in China. Noble's earnings will rebound on healthier commodity demand and margin normalisation.

My take:
i)I am vested in Midas. The rest are too high now, while China Merchant does not look attractive.

ii)Ezion is too high. The rest, I'm not too keen.

iii)NOL, Wilmar and Noble looking good. I am watching closely.

UBS Singapore Stock Pick 2013

 

UBS has identified the following list of stocks to buy in 2013 based on at least 2 of the following criteria:

 

1)Benefits from a global cyclical recovery;

 

2)Has credible and generous dividends;

 

3)can avoid the worst of tighter domestic conditions;

 

4)can tap demand growth via operations outside Singapore.

 

Stock	Remarks	Target Price
CapitaCommercialTrust	Our pick for pure play into office exposure. We expect Grade A rents to trough in H113; +5% YOY by H213. We expect leasing-related news flow to surprise on upside.	1.71
CapitaLand	Attractive valuations: 19% discount to RNAV. New CEO from Jan 2013. If CAPL could show renewed focused on core businesses, more aggressive asset turn, less dependence on non-cash income. This could spark rerating of residential franchise. China exposure (40% of RNAV)	3.92
DBS	Attractive valuations, offers the most upside among the 3 Singapore banks in our view. While NIM margin compression remains an issue, flipside of this is benign asset quality. Greater China drag on revenue growth mostly over. Yield should offer support.	16
Keppel Corp	Strong earnings visibility: Offshore order book is robust S$14bn. Industry conditions strong, good order momentum in 2013 expected. Attractive yield. Likelihood of positive DPS surprise is high; we currently forecast 2012 DPS forecast of S$0.46.	13
Genting Singapore	Our pick of 2012 index laggards. We expect major investment negatives in 2012 to turn more positive. Benefits from cyclical recovery in Chinese economy. Pick up in stock market, easier monetary conditions are also catalysts.	1.63
Noble Group	Is the most cyclical among the Singapore-listed commodities traders. Expansionary fiscal and monetary policies are the primary catalysts for the stock.	1.6
SingTel	Singapore: Stable business environment; India and Australia fundamentals improving. Offers decent yield at reasonable valuations.	3.41
Suntec REIT	Expected to be key beneficiary for office exposure. Retail offers room for upside surprise. Well on track to achieve 10.1% ROI on Suntec City AEIs. Main risk is high gearing, but manager’s track record is good.	1.76
Tiger Airways	Turnaround story, our pick of small cap names. Recent deal to sell Tiger Australia transforms EPS outlook. Street EPS revisions have not kept up; high likelihood of consensus upgrades, market has not factored this into prices	0.88

I have done a scan of the stocks on this list, and here is my conclusion:

Stock	Remarks
CapitaCommercialTrust	Too high.
CapitaLand	Too high.
DBS	Too high.
Keppel Corp	Too high.
Genting Singapore	Nicely breaking out of base. In my watch list.
Noble Group	Nicely breaking out of base. In my watch list.
SingTel	Too stable.
Suntec REIT	Too high.
Tiger Airways	Nicely forming a base. In my watch list.