Stock Name: SMRT
Company Name: SMRT CORPORATION LTD
Stock Name: Micro-Mech
Company Name: MICRO-MECHANICS (HOLDINGS) LTD
Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD
Market Pulse: Olam, SMRT, Micro-Mechanics & OSIM (31 Aug 2011)
FOCUS
Olam Int'l: BUY with lower S$2.63 fair value
Summary: Olam International Limited reported strong revenue growth in FY11, which jumped 50.5% to S$15.73b, surpassing our forecast of S$13.77b, driven by both higher sales volume and ASPs. Reported net profit (including exceptional items) came in at around S$429.8m, up 19.6%; while NPAT (excluding exceptional items) climbed 37.1% to S$372.8m, just above our S$369.4m forecast. Citing the strong performance in FY11 and the continued execution of its long-term strategic growth plans, Olam says it continues to be positive about its prospects for FY12. While we largely share Olam's optimism about its relatively resilient food-related commodities business, we cannot ignore the looming global economic uncertainties. So even as we revise up our FY12 revenue estimate, we pare our core earnings estimate due to lower margin assumptions. As we are also lowering our valuation peg to 18x FY12F EPS from 19x previously, our fair value drops to S$2.63. Maintain BUY. (Carey Wong)
SMRT Corporation: Downtown Line setback
Summary: It was announced on Monday evening that SMRT had lost the tender to operate the Downtown Line. While revenue yield projections for the DTL are too early to be assessed, at first glance the loss has cost SMRT as much as 14,000 square metres of gross commercial space and daily riderships of about 500,000. Looking ahead, there are still other opportunities for SMRT (Thomson and Eastern Regional Lines), and the setback should force SMRT to enhance its operational capabilities and improve its public image. While there is no impact on SMRT's earnings from the loss of the tender, we anticipate some temporary selling pressures on its stock from the announcement. We maintain our fair value estimate of S$2.04 but upgrade our rating to BUY on recent price weakness as the stock still represents decent dividend yield (4.4% FY12F). (Lim Siyi)
Micro-Mechanics: FY11 earnings slightly below expectations
Summary: Micro-Mechanics' (MMH) reported FY11 revenue were in-line with our expectations although net profit fell slightly short due to an apparent slowdown in 4QFY11 conditions. Revenue rose 10.6% to S$45.3m, or 3.1% below our forecast. Net profit jumped 43.0% to S$6.8m but this was below our projections by 7.7%. MMH's performance was partly affected by the weakening USD against SGD, as 48% of its sales were invoiced in USD. A final dividend of 2.0 S cents was declared, and total declared dividends for FY11 translates into a healthy yield of 6.7%. Moving forward, management would focus on improving the cycle-time of its manufacturing process to improve its operational efficiencies. Nevertheless we understand that some of its customers have provided a more cautious outlook. We lower our valuation peg on the group to 10x FY12F EPS (previously 12x blended FY11/FY12 EPS) due to subdued macroeconomic and industry conditions. Hence we derive a lower fair value estimate of S$0.50 (from S$0.67). Given MMH's more muted earnings growth expectations, we are downgrading the stock to HOLD. (Wong Teck Ching Andy)
OSIM International: Withdrawing its proposed TDR issue
Summary: OSIM International Ltd (OSIM) announced that it has decided to submit an application to the Taiwan Stock Exchange (TSE) and Securities and Futures Bureau of Taiwan (SFB) for the withdrawal of its proposed TDR issue. This decision was made after taking into consideration the ongoing global markets disruption. As a recap, OSIM had planned to raise net proceeds of ~S$76m (based on an indicative offer price of NT$20.80 or S$1.80 equivalent). We are not surprised by management's decision to withdraw its application as the recent sell-down in OSIM's share price means that the proposed indicative offer price now represents a 65.9% premium over its last closing price (21.6% premium over the average closing price of S$1.48 since it received approval from TSE on 29 Apr 2011). We had also previously stated in our 27 Jul 2011 report that we do not expect OSIM's expansion plans to be affected even if the TDR listing does not take place, given its excellent cash position. The group generated net operating cashflows of S$53.2m for 1H11 and also recently raised ~S$120m from the issue of convertible bonds. We have also not incorporated any proceeds from the proposed TDR in our financial model. Maintain BUYand fair value estimate of S$2.04. (Wong Teck Ching Andy)
For more information on the above, visit www.ocbcresearch.comfor detailed report.
NEWS HEADLINES
- The IMF has cut its 2011 growth forecast for the US and the eurozone to 1.6% and 1.9% respectively, down from 2.5% and 2% previously. It also said that the Federal Reserve and the European Central Bank (ECB) must be ready to ease policy to sustain the global economy.
- SIA retained its leading position in the ranking of airlines worldwide, according to online travel magazine SmartTravelAsia.com. However, Changi Airport slipped to second place, after Hong Kong International Airport, in the ranking of airports.
- Wing Tai Holdings recorded a 148% YoY jump in 4Q net earnings to S$171m, helped by fair value gains on its investment properties and higher contributions from its associates and joint ventures.
- China Minzhong reported FY11 net profit of RMB567m, up 54.2% YoY due to increased sales in both its vegetable cultivation and processed vegetable segments.
- OKP Holdings has secured a S$46.8m contract from PUB to work on Alexandra Canal, bringing its total order book to S$433.3m
- Chip Eng Seng Contractors won a S$113m HDB contract to build five blocks of residential buildings with 792 units and a multi-storey carpark at Hougang Neighbourhood 4.
Company Name: SMRT CORPORATION LTD
| Research House: OCBC | Price Call: BUY | Target Price: 2.04 |
Stock Name: Micro-Mech
Company Name: MICRO-MECHANICS (HOLDINGS) LTD
| Research House: OCBC | Price Call: HOLD | Target Price: 0.50 |
Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD
| Research House: OCBC | Price Call: BUY | Target Price: 2.04 |
Market Pulse: Olam, SMRT, Micro-Mechanics & OSIM (31 Aug 2011)
FOCUS
Olam Int'l: BUY with lower S$2.63 fair value
Summary: Olam International Limited reported strong revenue growth in FY11, which jumped 50.5% to S$15.73b, surpassing our forecast of S$13.77b, driven by both higher sales volume and ASPs. Reported net profit (including exceptional items) came in at around S$429.8m, up 19.6%; while NPAT (excluding exceptional items) climbed 37.1% to S$372.8m, just above our S$369.4m forecast. Citing the strong performance in FY11 and the continued execution of its long-term strategic growth plans, Olam says it continues to be positive about its prospects for FY12. While we largely share Olam's optimism about its relatively resilient food-related commodities business, we cannot ignore the looming global economic uncertainties. So even as we revise up our FY12 revenue estimate, we pare our core earnings estimate due to lower margin assumptions. As we are also lowering our valuation peg to 18x FY12F EPS from 19x previously, our fair value drops to S$2.63. Maintain BUY. (Carey Wong)
SMRT Corporation: Downtown Line setback
Summary: It was announced on Monday evening that SMRT had lost the tender to operate the Downtown Line. While revenue yield projections for the DTL are too early to be assessed, at first glance the loss has cost SMRT as much as 14,000 square metres of gross commercial space and daily riderships of about 500,000. Looking ahead, there are still other opportunities for SMRT (Thomson and Eastern Regional Lines), and the setback should force SMRT to enhance its operational capabilities and improve its public image. While there is no impact on SMRT's earnings from the loss of the tender, we anticipate some temporary selling pressures on its stock from the announcement. We maintain our fair value estimate of S$2.04 but upgrade our rating to BUY on recent price weakness as the stock still represents decent dividend yield (4.4% FY12F). (Lim Siyi)
Micro-Mechanics: FY11 earnings slightly below expectations
Summary: Micro-Mechanics' (MMH) reported FY11 revenue were in-line with our expectations although net profit fell slightly short due to an apparent slowdown in 4QFY11 conditions. Revenue rose 10.6% to S$45.3m, or 3.1% below our forecast. Net profit jumped 43.0% to S$6.8m but this was below our projections by 7.7%. MMH's performance was partly affected by the weakening USD against SGD, as 48% of its sales were invoiced in USD. A final dividend of 2.0 S cents was declared, and total declared dividends for FY11 translates into a healthy yield of 6.7%. Moving forward, management would focus on improving the cycle-time of its manufacturing process to improve its operational efficiencies. Nevertheless we understand that some of its customers have provided a more cautious outlook. We lower our valuation peg on the group to 10x FY12F EPS (previously 12x blended FY11/FY12 EPS) due to subdued macroeconomic and industry conditions. Hence we derive a lower fair value estimate of S$0.50 (from S$0.67). Given MMH's more muted earnings growth expectations, we are downgrading the stock to HOLD. (Wong Teck Ching Andy)
OSIM International: Withdrawing its proposed TDR issue
Summary: OSIM International Ltd (OSIM) announced that it has decided to submit an application to the Taiwan Stock Exchange (TSE) and Securities and Futures Bureau of Taiwan (SFB) for the withdrawal of its proposed TDR issue. This decision was made after taking into consideration the ongoing global markets disruption. As a recap, OSIM had planned to raise net proceeds of ~S$76m (based on an indicative offer price of NT$20.80 or S$1.80 equivalent). We are not surprised by management's decision to withdraw its application as the recent sell-down in OSIM's share price means that the proposed indicative offer price now represents a 65.9% premium over its last closing price (21.6% premium over the average closing price of S$1.48 since it received approval from TSE on 29 Apr 2011). We had also previously stated in our 27 Jul 2011 report that we do not expect OSIM's expansion plans to be affected even if the TDR listing does not take place, given its excellent cash position. The group generated net operating cashflows of S$53.2m for 1H11 and also recently raised ~S$120m from the issue of convertible bonds. We have also not incorporated any proceeds from the proposed TDR in our financial model. Maintain BUYand fair value estimate of S$2.04. (Wong Teck Ching Andy)
For more information on the above, visit www.ocbcresearch.comfor detailed report.
NEWS HEADLINES
- The IMF has cut its 2011 growth forecast for the US and the eurozone to 1.6% and 1.9% respectively, down from 2.5% and 2% previously. It also said that the Federal Reserve and the European Central Bank (ECB) must be ready to ease policy to sustain the global economy.
- SIA retained its leading position in the ranking of airlines worldwide, according to online travel magazine SmartTravelAsia.com. However, Changi Airport slipped to second place, after Hong Kong International Airport, in the ranking of airports.
- Wing Tai Holdings recorded a 148% YoY jump in 4Q net earnings to S$171m, helped by fair value gains on its investment properties and higher contributions from its associates and joint ventures.
- China Minzhong reported FY11 net profit of RMB567m, up 54.2% YoY due to increased sales in both its vegetable cultivation and processed vegetable segments.
- OKP Holdings has secured a S$46.8m contract from PUB to work on Alexandra Canal, bringing its total order book to S$433.3m
- Chip Eng Seng Contractors won a S$113m HDB contract to build five blocks of residential buildings with 792 units and a multi-storey carpark at Hougang Neighbourhood 4.
No comments:
Post a Comment