Stock Name: SATS
Company Name: SATS LTD.
Market Pulse: SATS and Micro-Mechanics (10 Oct 2011)
FOCUS
SATS Ltd: Value in selling Daniels?
Summary: SATS Ltd confirmed that it is in talks to sell its UK subsidiary the Daniels Group but clarified there is no certainty that a deal will be done; and Daniels will remain part of SATS if a sale does not materialise. Our scenario analysis resulted in six possible fair values for SATS, ranging from a low of S$2.13 to a high of S$2.41 per share. We can infer from the purported sale of Daniels that management does not view Daniels as an integral part of its vision for the future. But until we get more details, we maintain our HOLDrating on SATS and a fair value of $2.36 per share. We would be buyers closer to S$2.00. (Research Team)
Micro-Mechanics: Lowering estimates on weakening industry outlook
Summary: The tepid macro economy, excess semiconductor inventory levels and rising consumer pessimism signal tough times ahead for Micro-Mechanics Holdings (MMH). Industry watchers have recently pared their forecasts for global semiconductor sales for 2011 and 2012. On a positive note, we opine that MMH's healthy balance sheet would provide the group with a buffer against the increasing cyclical risk in the sector, especially since it carries no debt on its books. We believe that MMH would continue to showcase its resilience in today's difficult operating environment, backed by its strong management team. However, in light of the weakening macroeconomic and industry outlook, we are lowering our estimates for MMH and now expect revenue and net profit to decline by 1.3% and 7.8% instead of a 4.8% and 2.1% rise in FY12 respectively (FY13 earnings estimates also cut by 8.1%). Maintain HOLD for its attractive prospective yield of 6.7% with a new fair value estimate of S$0.45 (previously S$0.50), still based on 10x FY12F EPS. (Wong Teck Ching Andy)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
- German Chancellor Angela Merkel and French President Nicolas Sarkozy promised swift response to the eurozone debt crisis, insisting they were united on plans to shore up Europe's banks.
- MAS is studying whether financial institutions here need to draw up plans for a quick recovery or a clean closure in the event of a crisis, similar to what regulators in a number of developed markets are enforcing.
- SGX-listed and Hong Kong-based developer SingXpress Land will launch its maiden property project, a 21-unit freehold cluster on Charlton Road, in November 2011.
- China Aviation Oil (Singapore) Corporation (CAO) is planning to invest about S$37m in a 26% in Oilhub Korea Yeosu Co (OKYC), making it second biggest shareholder in OKYC after Korea National Oil Corp (KNOC).
- Tannery Heng Long International said it has received a conditional cash offer from LVWH Asia to acquire all its issued and paid up ordinary shares for S$0.60 per share.
- China's Sinopec International Petroleum Exploration and Production Corp announced it will buy Canadian oil and gas company Daylight Energy Ltd for about C$2.2 bn /US$2.1bn.
Company Name: SATS LTD.
| Research House: OCBC | Price Call: HOLD | Target Price: 2.36 |
Market Pulse: SATS and Micro-Mechanics (10 Oct 2011)
FOCUS
SATS Ltd: Value in selling Daniels?
Summary: SATS Ltd confirmed that it is in talks to sell its UK subsidiary the Daniels Group but clarified there is no certainty that a deal will be done; and Daniels will remain part of SATS if a sale does not materialise. Our scenario analysis resulted in six possible fair values for SATS, ranging from a low of S$2.13 to a high of S$2.41 per share. We can infer from the purported sale of Daniels that management does not view Daniels as an integral part of its vision for the future. But until we get more details, we maintain our HOLDrating on SATS and a fair value of $2.36 per share. We would be buyers closer to S$2.00. (Research Team)
Micro-Mechanics: Lowering estimates on weakening industry outlook
Summary: The tepid macro economy, excess semiconductor inventory levels and rising consumer pessimism signal tough times ahead for Micro-Mechanics Holdings (MMH). Industry watchers have recently pared their forecasts for global semiconductor sales for 2011 and 2012. On a positive note, we opine that MMH's healthy balance sheet would provide the group with a buffer against the increasing cyclical risk in the sector, especially since it carries no debt on its books. We believe that MMH would continue to showcase its resilience in today's difficult operating environment, backed by its strong management team. However, in light of the weakening macroeconomic and industry outlook, we are lowering our estimates for MMH and now expect revenue and net profit to decline by 1.3% and 7.8% instead of a 4.8% and 2.1% rise in FY12 respectively (FY13 earnings estimates also cut by 8.1%). Maintain HOLD for its attractive prospective yield of 6.7% with a new fair value estimate of S$0.45 (previously S$0.50), still based on 10x FY12F EPS. (Wong Teck Ching Andy)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
- German Chancellor Angela Merkel and French President Nicolas Sarkozy promised swift response to the eurozone debt crisis, insisting they were united on plans to shore up Europe's banks.
- MAS is studying whether financial institutions here need to draw up plans for a quick recovery or a clean closure in the event of a crisis, similar to what regulators in a number of developed markets are enforcing.
- SGX-listed and Hong Kong-based developer SingXpress Land will launch its maiden property project, a 21-unit freehold cluster on Charlton Road, in November 2011.
- China Aviation Oil (Singapore) Corporation (CAO) is planning to invest about S$37m in a 26% in Oilhub Korea Yeosu Co (OKYC), making it second biggest shareholder in OKYC after Korea National Oil Corp (KNOC).
- Tannery Heng Long International said it has received a conditional cash offer from LVWH Asia to acquire all its issued and paid up ordinary shares for S$0.60 per share.
- China's Sinopec International Petroleum Exploration and Production Corp announced it will buy Canadian oil and gas company Daylight Energy Ltd for about C$2.2 bn /US$2.1bn.
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