Excerpts from analysts' reports

CIMB says CSE Global to pay 28 cents special dividend and 2.5 cents final dividend

yeozhibinAnalyst: YEO Zhi Bin (left)

Update on Servelec divestment: Book-building for its Servelec IPO has been completed. The offer price has been fixed and CSE will be receiving net proceeds of S$219.6m, after deducting S$24.5m in expenses, which include its management payout. 

While there were some concerns about the “high” transaction expectations for the IPO, management shared that there are incentives in place for the investment bankers and management to get as high an offer price as possible. An EGM will 
be held on 28 Nov to obtain shareholders’ approval for the divestment. 
 
Special DPS of S$0.28: In a successful listing, CSE will be receiving net proceeds of S$219.6m and could book a gain of S$88.9m in 4Q.

We expect S$10.7m of core earnings (-6% qoq and flat yoy) for 4Q13 as the group will only be consolidating two months of contribution from Servelec (Oct-Nov).

The net sale proceeds value Servelec at 12.6x trailing P/E.
 
CSE intends to distribute S$144.5m or S$0.28/share as an interim special dividend and use the remaining S$75.1m to repay debts. On top of the special dividend, we expect a final ordinary DPS of 2.5Scts, potentially taking its full-year ordinary DPS to 4Scts, more or less in line with its 40% payout guidance from core earnings.

Continuing operations offer value:  Excluding the above net proceeds from CSE's market cap, we estimate that its continuous operations are valued at 6.7x CY15 P/E with a 6.6% dividend yield (assuming a 40% payout). We find such valuations attractive, given that CSE has been trading at around 8x forward P/E. 

Recent story: CSE GLOBAL: Will it return as much as 26-28 cents to shareholders?



 
OSK-DMG raises target price of Yangzijiang to $1.50

Analysts: Jason Saw & Lee Yue Jer
 
570_Liu_n_RenL-R: CFO Liu Hua, executive chairman Ren Yuanlin. NextInsight file photo

YZJ’s 3Q13 earnings of CNY821m (-6% y-o-y) beat our/consensus estimates by 12/32% as margins at its shipbuilding-related segment stayed higher than expected.

We reiterate our BUY call, with a higher SOP-based TP of SGD1.50, implying a 29% upside.

Our FY13-15F EPS estimates are 6/27/23% above consensus. We expect a rerating, spurred by stronger ship orders amid industry consolidation in China and growing demand for eco-friendly ships.

Growing orderbook enhances visibility. The company has a net orderbook of USD3.87bn (CNY23.6bn) for 88 vessels. YTD, YZJ has won USD2.1bn new orders for 52 vessels, marking its strongest order intake since 2007.

The company has 29 options worth USD1.36bn and management expects some of these to be taken up by end-FY13.

We have forecast USD2.6bn worth of new orders in FY13.

HTM investments set to remain high for a while longer. Management plans to maintain the current level of held-to-maturity (HTM) investments in the next few years. As such, we expect HTM investment income to stay high over FY14F-15F. 

Recent story:  YANGZIJIANG: 'Outperform' & 'Buy' calls from CIMB, Deutsche Bank, UOBKH
 

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