Stock Name: PEC
Company Name: PEC LTD.
Market Pulse: Raffles Education & PEC (25 Aug 2011)
FOCUS
Raffles Education: FY11 results boosted by exceptional items
Summary: Raffles Education Corp (REC) ended FY11 on a muted note, with revenue retracting 16.2% to S$157.6m, representing its second consecutive year of top-line decline. This was 4.7% lower than our forecast of S$165.4m. Net profit dipped 20.2% to S$41.9m. Excluding forex effects and exceptional items, we estimate that adjusted earnings would have decreased 29.5% to S$18.7m. This was 4.3% above our projection of S$17.9m. The slump in revenue was attributed to a decline in student enrolment numbers for all its business segments (-22.0%), coupled with currency translation losses due to the strengthening of the SGD against the RMB. We believe that near term pressures are likely to persist for REC, given rising personnel expenses and start-up costs from its new universities. Moreover execution risks exist for its plans to monetise its assets. Coupled with the increasing macroeconomic uncertainty, we see a lack of positive catalysts for the group in the foreseeable future. As such, we are DROPPING COVERAGE on REC. (Wong Teck Ching Andy)
PEC: Losses from associates and JVs
Summary: PEC Ltd reported its FY11 results last evening. Revenue decreased by 13% YoY to S$407m and was in line with our expectations. Net profit fell 24% YoY to S$32m, missing our estimates by 20%. This was mainly due to an unexpected S$6.7m of losses from associates and JVs in 4Q, which wiped out gains from the previous three quarters. The losses relate to provisions for unconfirmed claims arising from variation works carried out. As of 31 June 2011, PEC's balance sheet remained strong with S$159m in cash and S$0.9m in debt. Its order book increased to S$300m, up from S$210m as of last quarter-end. It also announced dividends of 3.0 cents per share. Pending an analyst briefing in the afternoon, we put our BUY rating and S$1.23 fair value estimate UNDER REVIEW. (Chia Jiun-Yang)
For more information on the above, visit www.ocbcresearch.comfor detailed report.
NEWS HEADLINES
- Singapore is currently studying a "product grid system" for petrochemical hub Jurong Island that may lead to potential private or private-public joint-venture ownership and operatorship of future pipelines.
- A 44,700 sf plot of land near The Centrepoint mall with a balance lease of 67 years could be put up on the market through a collective sale. It is zoned for commercial use.
- Fraser Centrepoint Trust announced funding plans for the Bedok Point acquisition. It will issue up to 55m new units that could be sold at $1.38 each - an illustrative price that could raise S$75.9m of the S$127m acquisition price.
- Overseas Union Enterprise (OUE) said it will be proposing a share buyback mandate to allow it to purchase back its issued shares.
- Malaysian billionaire Robert Kuok's Singapore property arm, Allgreen Properties, will be delisted today.
Company Name: PEC LTD.
| Research House: OCBC | Price Call: BUY | Target Price: 1.23 |
Market Pulse: Raffles Education & PEC (25 Aug 2011)
FOCUS
Raffles Education: FY11 results boosted by exceptional items
Summary: Raffles Education Corp (REC) ended FY11 on a muted note, with revenue retracting 16.2% to S$157.6m, representing its second consecutive year of top-line decline. This was 4.7% lower than our forecast of S$165.4m. Net profit dipped 20.2% to S$41.9m. Excluding forex effects and exceptional items, we estimate that adjusted earnings would have decreased 29.5% to S$18.7m. This was 4.3% above our projection of S$17.9m. The slump in revenue was attributed to a decline in student enrolment numbers for all its business segments (-22.0%), coupled with currency translation losses due to the strengthening of the SGD against the RMB. We believe that near term pressures are likely to persist for REC, given rising personnel expenses and start-up costs from its new universities. Moreover execution risks exist for its plans to monetise its assets. Coupled with the increasing macroeconomic uncertainty, we see a lack of positive catalysts for the group in the foreseeable future. As such, we are DROPPING COVERAGE on REC. (Wong Teck Ching Andy)
PEC: Losses from associates and JVs
Summary: PEC Ltd reported its FY11 results last evening. Revenue decreased by 13% YoY to S$407m and was in line with our expectations. Net profit fell 24% YoY to S$32m, missing our estimates by 20%. This was mainly due to an unexpected S$6.7m of losses from associates and JVs in 4Q, which wiped out gains from the previous three quarters. The losses relate to provisions for unconfirmed claims arising from variation works carried out. As of 31 June 2011, PEC's balance sheet remained strong with S$159m in cash and S$0.9m in debt. Its order book increased to S$300m, up from S$210m as of last quarter-end. It also announced dividends of 3.0 cents per share. Pending an analyst briefing in the afternoon, we put our BUY rating and S$1.23 fair value estimate UNDER REVIEW. (Chia Jiun-Yang)
For more information on the above, visit www.ocbcresearch.comfor detailed report.
NEWS HEADLINES
- Singapore is currently studying a "product grid system" for petrochemical hub Jurong Island that may lead to potential private or private-public joint-venture ownership and operatorship of future pipelines.
- A 44,700 sf plot of land near The Centrepoint mall with a balance lease of 67 years could be put up on the market through a collective sale. It is zoned for commercial use.
- Fraser Centrepoint Trust announced funding plans for the Bedok Point acquisition. It will issue up to 55m new units that could be sold at $1.38 each - an illustrative price that could raise S$75.9m of the S$127m acquisition price.
- Overseas Union Enterprise (OUE) said it will be proposing a share buyback mandate to allow it to purchase back its issued shares.
- Malaysian billionaire Robert Kuok's Singapore property arm, Allgreen Properties, will be delisted today.
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