Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Market Pulse: Sembcorp Marine & Wilmar (6 Oct 2011)
FOCUS
Sembcorp Marine: FPSO conversion work from repeat customer
Summary: Sembcorp Marine (SMM) announced recently that its wholly owned subsidiary, Jurong Shipyard, has secured an FPSO conversion project worth about S$130m from MODEC. Delivery to MODEC is scheduled to be in 2Q13 in Brazilian waters, which still remains a major source of work where oil related companies are hopeful of securing more orders. SMM has secured S$2.8b worth of new orders YTD, accounting for 62% of our full year estimate. The group has eight outstanding rig options worth about S$2b which we estimate should expire by 1H12. Meanwhile, it is also in the running for additional projects. As the contract value of individual projects can be substantial (recall PTTEP's S$600m integrated platform order), the securing of two such projects would increase SMM's order book considerably. However, should we fail to hear of more new orders in the near term, the group would be exposed to higher earnings risk. Meanwhile, we keep our earnings estimates intact for now and maintain our BUY rating with S$5.70 fair value estimate. (Low Pei Han)
Wilmar: Lower S$4.78 fair value on weaker China outlook
Summary: Wilmar International Limited's (WIL) shares saw a massive sell-down over the past two days, likely spooked by the looming specter of a hard landing for China's massive economy. As WIL derives 60% of its earnings from China in 1H11, any significant economic contraction would have an impact on its performance. We believe that its crushing business may be the most affected; but we are less concerned with WIL's cooking oil business. In line with the weaker overall market, as well as the more muted outlook for China, we are reducing our valuation peg from 16x to 12x (-1 standard deviation from its 4-year mean) and when applied against its FY12F EPS, we derive a new fair value of S$4.78. Given the limited upside, we maintain our HOLD rating. (Carey Wong)
For more information on the above, visit www.ocbcresearch.comfor detailed report.
NEWS HEADLINES
- US service industries expanded in September at a slower pace than August, the Institute for Supply Management's non-manufacturing index fell from 53.3 to 53.
- According to Ernst & Young reports, 3Q IPOs in Asia have raised the least money since the 2Q 2009, as companies hold back listings.
- Singapore Post appoints its new CEO after a long hunt - an internal candidate, Wolfgang Baier, the CEO of the company's international division will take over as group CEO.
- Hsieh Fu Hua, has stepped down from his role as President of Temasek Holdings after a 13 month stint, citing "personal priorities" for the move.
- UOB aims to double cross border business lending within three years, riding on a wave of foreign direct investment into Asia's fast growing economies.
- Great Group Holdings, a garment manufacturer based in China and listed in Singapore since 2009, announced yesterday that it has received in principle approval from Singapore Exchange to list up to 42m new shares on the London Stock Exchange.
- COE premiums for 3 out of 5 car categories climbed, after Transport Minister Lui Tuck Yew's comments about taking further action to curb vehicle population in Singapore.
Company Name: WILMAR INTERNATIONAL LIMITED
| Research House: OCBC | Price Call: HOLD | Target Price: 4.78 |
Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
| Research House: OCBC | Price Call: BUY | Target Price: 5.70 |
Market Pulse: Sembcorp Marine & Wilmar (6 Oct 2011)
FOCUS
Sembcorp Marine: FPSO conversion work from repeat customer
Summary: Sembcorp Marine (SMM) announced recently that its wholly owned subsidiary, Jurong Shipyard, has secured an FPSO conversion project worth about S$130m from MODEC. Delivery to MODEC is scheduled to be in 2Q13 in Brazilian waters, which still remains a major source of work where oil related companies are hopeful of securing more orders. SMM has secured S$2.8b worth of new orders YTD, accounting for 62% of our full year estimate. The group has eight outstanding rig options worth about S$2b which we estimate should expire by 1H12. Meanwhile, it is also in the running for additional projects. As the contract value of individual projects can be substantial (recall PTTEP's S$600m integrated platform order), the securing of two such projects would increase SMM's order book considerably. However, should we fail to hear of more new orders in the near term, the group would be exposed to higher earnings risk. Meanwhile, we keep our earnings estimates intact for now and maintain our BUY rating with S$5.70 fair value estimate. (Low Pei Han)
Wilmar: Lower S$4.78 fair value on weaker China outlook
Summary: Wilmar International Limited's (WIL) shares saw a massive sell-down over the past two days, likely spooked by the looming specter of a hard landing for China's massive economy. As WIL derives 60% of its earnings from China in 1H11, any significant economic contraction would have an impact on its performance. We believe that its crushing business may be the most affected; but we are less concerned with WIL's cooking oil business. In line with the weaker overall market, as well as the more muted outlook for China, we are reducing our valuation peg from 16x to 12x (-1 standard deviation from its 4-year mean) and when applied against its FY12F EPS, we derive a new fair value of S$4.78. Given the limited upside, we maintain our HOLD rating. (Carey Wong)
For more information on the above, visit www.ocbcresearch.comfor detailed report.
NEWS HEADLINES
- US service industries expanded in September at a slower pace than August, the Institute for Supply Management's non-manufacturing index fell from 53.3 to 53.
- According to Ernst & Young reports, 3Q IPOs in Asia have raised the least money since the 2Q 2009, as companies hold back listings.
- Singapore Post appoints its new CEO after a long hunt - an internal candidate, Wolfgang Baier, the CEO of the company's international division will take over as group CEO.
- Hsieh Fu Hua, has stepped down from his role as President of Temasek Holdings after a 13 month stint, citing "personal priorities" for the move.
- UOB aims to double cross border business lending within three years, riding on a wave of foreign direct investment into Asia's fast growing economies.
- Great Group Holdings, a garment manufacturer based in China and listed in Singapore since 2009, announced yesterday that it has received in principle approval from Singapore Exchange to list up to 42m new shares on the London Stock Exchange.
- COE premiums for 3 out of 5 car categories climbed, after Transport Minister Lui Tuck Yew's comments about taking further action to curb vehicle population in Singapore.
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