MARKET TALK: Hiap Seng Engineering +16.9%; Undervalued - DBS


Hiap Seng Engineering (510.SG) +16.9% at S$0.76 in active trade, highest level since November 2007, prompting query from SGX on price action. Singapore-based plant builder yet to reply but traders attribute gains to bullish note from DBS Vickers, which has Buy call with S$0.94 target. House says Hiap Seng's huge P/E discount of 28%-50% to peers not warranted, especially given its steady earnings growth, healthy balance sheet, high dividend payout. Adds order flow momentum expected to pick up; "we remain positive on demand for gas compressor packages from the Middle East. We believe active negotiations taking place are likely to translate into firm orders in the months ahead." Current orderbook at S$166 million. Orderbook quotes suggest minimal upside beyond early high of S$0.80.