Company Name: PEC LTD.
| Research House: OCBC | Price Call: BUY | Target Price: 1.12 |
Stock Name: Karin
Company Name: KARIN TECHNOLOGY HLDGS LIMITED
| Research House: OCBC | Price Call: BUY | Target Price: 0.315 |
Market Pulse: PEC, Karin Tech (26 Aug 2011)
FOCUS
PEC: Losses from associates and JVs
Summary: PEC Ltd's 4Q revenue and net profit fell by 19% and 64% to S$101m and S$3.5m respectively. On a full year basis, FY11 revenue was S$407m, in line with our expectations. However, net profit fell 24% YoY to S$32m, 20% shy of our estimates. This was mainly due to an unexpected S$6.7m of losses from associates and JVs in 4Q, which had wiped out gains from the previous three quarters. The company's balance sheet remained strong with S$159m in cash and S$0.9m in debt. To reflect the strength of its cash position, we switched to SOTP valuation and obtained a fair value estimate of S$1.12 (versus S$1.23). Maintain BUY. (Chia Jiunyang)
Karin Technology: Ends FY11 with strong results
Summary: Karin Technology (Karin) announced a strong set of 2HFY11 results which beat ours and the streets' estimates. Revenue surged 57.3% to HK$1.3b while net profit increased 22.4% to HK$30.2m. For FY11, revenue jumped 38.7% to HK$2.2b, which exceeded our forecasts by 15.1%. Net profit accelerated by 52.6% to HK$51.6m. This was boosted by fair value gains on investment properties (HK$6.0m) and derivative instruments (HK$1.3m) as well as forex gains of HK$5.1m, although offset by impairment of trade receivables (HK$8.2m) and write-down of obsolete inventories (HK$3.0m). Excluding forex effects and these exceptional items, we estimate that core earnings would have increased by 87.8% to HK$50.5m. This came in 18.2% above our estimates. A final dividend of 7 HK cents/share was declared, bringing total declared dividends for FY11 to 12 HK cents/share (versus 8.2 HK cents/share in FY10). An analyst briefing will be held later this afternoon. We are likely to revise our projections upwards, although our fair value estimate would be impacted by continued weakness in the HKD versus the SGD. Hence we place our BUY rating and S$0.315 fair value estimate UNDER REVIEW. (Wong Teck Ching Andy)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
- S&P reaffirmed Singapore's AAA rating but warned that the country remains vulnerable to external economic shocks due to its small and open economy.
- Shares of the three local banking groups lost more ground this week amid concerns over the level of asset deterioration the banks would suffer if a recession hit, as well as expected slowdown in loan growth.
- Tiger Airways said it will be seeking a rights issue to raise S$155m in net proceeds for its expansion plans in Asia as well as to support its operations in Australia.
- Australia's Lend Lease group is selling a 25% stake in 313@somerset; the other 75% will continue to be held by a fund managed by the group.
- Eu Yan Sang's 4QFY11 profit soared 68% YoY to S$5.5m attributable mainly to increase in retail sales in Hong Kong, Malaysia and Singapore.
- Amtek Engineering reported a surge in 4QFY11 net profit to US$9.62m, thanks to higher revenue, stable margins and an absence this round of a non-recurring plant closure charge.
- Government agencies launched four more residential sites - in Loyang, Flora Drive, Pasir Ris and Yishun - that can yield 1,885 units in total for sale by tender yesterday.
- Singapore is said to have attracted Manchester United in part by assuring a speedier approval process for its IPO. The club is also believed to be seeking to raise US$1b to reduce its debts.
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