Olam jumps on earnings, higher profit target

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: Credit Suisse

Price Call: BUY

Target Price: 3.85

Shares of Singapore commodity firm Olam International (OLAM.SI) rose as much as 6.4% on Wednesday after it reported quarterly earnings that were stronger than expected and raised its profit target for the medium term, traders said.

At 9:36 a.m., shares of Olam were 5.6% higher at $2.46 with over 8 million shares changing hands.

Olam said on Monday its fourth-quarter net profit rose 38% from a year ago to $127.4 million, helped by higher margins from its recent investments in plantations and processing.

Credit Suisse has raised its target price for Olam to $3.85 from $3.70 and kept its outperform rating, as it expects Olam to deliver stronger volume growth and better margins.

Olam’s management targets to deliver US$1 billion ($1.2 billion) in net profit in fiscal 2016, up from its previous target of US$454 million in 2015, Credit Suisse said in a report.

Market Pulse: Olam, SMRT, Micro-Mechanics & OSIM (31 Aug 2011)

Stock Name: SMRT
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.

DMG cuts Olam price target

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: DMG

Price Call: BUY

Target Price: 2.98

DMG & Partners cut its share-price target for Singapore commodities firm Olam International (OLAM.SI) to $2.98 from $3.70, but kept its “buy” rating.

Olam’s fourth-quarter net profit, excluding exceptional items, was above DMG’s expectations.

The brokerage also said it expects Olam’s earnings to be resilient going forward as it derives a high%age of profits from food-related segments.

“We believe food-related segments would be more resilient moving ahead, but the weakness in industrial raw materials such as wood and cotton would partly offset the positives,” DMG said in a report.

The brokerage cut its earnings estimates for Olam to reflect its expectations the company will see negative free cash flows till fiscal 2013.

Olam shares have lost 25.6% since the start of the year. They closed at $2.33 on Monday.

CIMB cuts Wing Tai price target

Stock Name: Wing Tai
Company Name: WING TAI HLDGS LTD

Research House: CIMB

Price Call: BUY

Target Price: 1.51

CIMB Research cut its share-price target on Singapore-listed retailer and property developer Wing Tai Holdings (WTHS.SI) to $1.51 from $1.93 and kept its “outperform” rating on the stock.

CIMB Research cut its target price to account for lower average selling prices of the company’s residential units.

Wing Tai Holdings said on Monday its fourth-quarter net profit more than doubled to $170.6 million.

The company has proposed a final dividend of 7 cents for the year, implying an attractive yield of 5.5%, CIMB said.

Sales of its residential units, especially those priced at the higher end, could remain sluggish, but Wing Tai is in a strong financial position to weather any slowdown in the property market, CIMB said.

At 9:24 a.m., shares of Wing Tai were 6.8% higher at $1.34. They have fallen 20.4% since the start of the year.

DMG cuts China Minzhong target price

Stock Name: ChinaMinzhong
Company Name: CHINA MINZHONG FOOD CORP LTD

Research House: DMG

Price Call: BUY

Target Price: 1.68

DMG & Partners cut its target price for Singapore-listed China Minzhong Food Corporation (CMFC.SI) to $1.68 from $2.28 and kept its buy rating.

China Minzhong reported fourth-quarter net profit of 97 million yuan, up 33% from a year ago and ahead of DMG's expectations, due to strong revenue growth from its fresh and processed vegetable segments.

However, DMG has cut its fiscal 2012-2013 earnings estimates by 5-3%, due to uncertainty over demand from the United States and Europe in light of a potential economic slowdown.

“We continue to like China Minzhong as it will likely remain a key beneficiary of current high food inflationary environment and the management’s strong execution post-listing, delivering quarterly results that were either within or exceeded consensus expectations,” DMG said.

At 10:59 a.m., shares of China Minzhong were 1.7% higher at $1.215 and have fallen 10.7% since the start of the year.

Olam's Hold call to stay; 12-month target price lowered to $2.55: DBS Vickers

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: DBS Vickers

Price Call: HOLD

Target Price: 2.55

DBS Vickers is maintaining its Hold call on Olam International and lowering its 12-month price target to $2.55 from $3.00 as the brokerage sees a “limited 9% upside” to revised 12-month target price of $2.55.

But it sees an additional upside of $0.47 per share if Olam’s Gabon project achieves financial close in 1QCY12.

The brokerage says Olam is fairly priced in a robust medium term outlook. The stock currently trades at FY12 PE of 13.7x with three-year earnings CAGR of 13.9% (excluding biological assets gains).

But DBS Vickers lowered its FY12-14F EPS by 3-5% to account for higher operating expenses and borrowing costs, which should still more than offset upgrades in net contribution from all segments. So, its core net profit (ex BA gains) should grow by 28% in FY12F, 6% in FY13F and 9% in FY14F, it adds.

For FY11, Olam’s core profit of $302 million was below DBS Vickers’ forecast of $331 million and consensus expectations of $340.5 million. This represented 39% y-o-y growth, driven by 21% lift in volumes and increase in group NC/MT (Net Contribution/tonne) from $129 to $145, partly weighed down by 25% higher operating expenses and 51% jump in borrowing costs.

All segments delivered strong volume growth with Food Staples up 28% y-o-y, Confectionary and Beverage up 15%, Edible Nuts up 15% and Industrial Raw Materials up 13%. Group NC/MT improved due to better business mix, with greater contribution from Edible Nuts at $233/MT (now 24% of NC vs 23% in FY10) and Confectionary and Beverage at $212/MT (26% of NC vs 25%).


 

SG:Olam Int'l- BUY with lower S$2.63 fair value

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.63

31 August 2011: Olam Intl Limited


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.

Singapore Airlines upgraded to 'buy/' by Kim Eng

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: Kim Eng

Price Call: BUY

Target Price: 14.40

Kim Eng Research in an Aug 26 research report says: "SIA's 32.8%-owned associate Tiger Airways has announced a 1-for-2 rights issue to raise $158.6 million. SIA will underwrite up to 81.8% of the total issue.

"At a rights price of $0.58 per Tiger share, SIA's subscription to its entitlement amounts to $51.9 million and a maximum potential commitment of $77.9 million. The issue will create no stress on its cash pile of around $6 billion. While the rights issue is not financially significant, we upgrade SIA to a buy following its share price correction of 25%, versus the STI's decline of 15%.

"Our target price is unchanged at $14.40, based on 1.2x P/B. Trough valuation in 2008 was a P/B of 0.8x, translating to a implied floor of $9.50. UPGRADE TO BUY."

Lippo-Mapletree Indonesia Retail Trust rated 'increase exposure" by SIAS

Stock Name: LippoMapleT
Company Name: LIPPO-MAPLETREEINDORETAILTRUST

Research House: SIAS

Price Call: BUY

Target Price: 0.795

SIAS Research in an Aug 26 research report says: "LMIRT is the only S-REIT listed in the SGX that provides exposure to the Indonesian retail market. Following the LMIRT's May 23 news release, Lippo Karawaci had announced plans to inject $2.4 billion of mall assets over the next three years with LMIRT having the first right of refusal.

"We like LMIRT for (1) its access to acquisitions through its sponsor which we believe will have a positive impact, (2) the outlook in the retail sector in Indonesia, and (3) large gap between NAV and its current price.

"We conduct our valuations using the DDM as S-REITs have a 90% distributable income payout mandate. Intrinsic value of 79.5 cents, representing a price-value gap of 44.5% over its current price of 55 cents. INCREASE EXPOSURE (initiating coverage)."

Singapore Telecommunications upgraded to 'buy' by Kim Eng

Stock Name: SingTel
Company Name: SINGTEL

Research House: Kim Eng

Price Call: BUY

Target Price: 3.41

Kim Eng Research in an Aug 26 research report says: "We are upgrading SingTel to a BUY following the recent plunge in its share price that has pushed dividend yield to a relatively attractive 6% and valuations down to 2009 troughs.

"With this upgrade, we now have BUY calls on all three Singapore telcos as we expect the flight to quality to continue, with or without QE3. We also note that SingTel CEO Chua Sock Koong recently bought 728,000 shares at $3.01-3.02 per share, a sign of insider confidence.

"Our target price is $3.41, based on 14x FY Mar12 forecast, slightly below its peer group average of 15.2x. With free cash flow comfortably exceeding dividend commitments, we forecast a DPS of $0.17-0.179 for FY Mar12-13, yielding 5.6-5.9%. UPGRADE TO BUY."

Goodpack upgraded to 'hold' by DBS

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: DBS Vickers

Price Call: HOLD

Target Price: 1.69

DBS Vickers Securities in an Aug 29 research report says: "Goodpack reported FY2011 PATMI of $43.2 million which was ahead of consensus and our expectations of $42 million. 4QFY11 net profit stood at $11.8 million (+57% y-o-y, +11% q-o-q).

"Final dividend per share of $0.02 and $0.01 special dividend declared. The strong FY2011 result was driven by rise in revenues to $158.8 million (+29% y-o-y) on the back of gains in natural (NR) and synthetic rubber (SR) where market share now stands at 38% and 27% respectively.

"FY2012-2014F EPS increased by 2-4% on higher IBC (Intermediate Bulk Container) fleet and lower tax. EBITDA margins fell to 44.8% from 46.6% in FY2010 due primarily to higher leasing costs. Post earnings revisions, we raise target price to $1.69 from $1.52. UPGRADE TO HOLD."

ComfortDelgro Corporation rated 'buy' by Phillip Securities

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: Phillip Securities

Price Call: BUY

Target Price: 1.83

Phillip Securities Research in an Aug 31 research report says: "The Land Transport Authority (LTA) announced the award of Downtown Line (DTL) to ComfortDelGro's (CDG) 75% owned subsidiary, SBS Transit (SBST). The licence tenure had also been reduced to 15 years with charges of $1.6 billion over 19 years.

"Under the new rail financing framework, LTA would own the operating assets and lease them to SBST for a fee that would be accumulated in a "Railway Sinking Fund" to finance future CAPEX. We estimate total nominal revenue generated over the 19 years of operations to be approximately $3.5-4 billion.

"We used a blended valuation model of DCF and P/E (15X FY11e PATMI) to arrive at our target price of $1.83. CDG could potentially return 40% after incorporating our forecasted dividends of 5.5 cents over the next 12months. MAINTAIN BUY."

PEC downgraded to 'hold' by DBS

Stock Name: PEC
Company Name: PEC LTD.

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.90

DBS Vickers Securities in an Aug 29 research report says: "PEC posted FY2011 headline PATMI of $32.1 million; excluding fair value gains on derivatives, core PATMI was $29.5 million, 19% below expectations.

"The variance was due mainly to JV/associates losses of $6.6 million arising from unsettled variation orders on the JV's Rotterdam project. A final and special dividend per share of 3.0 cents was declared. FY2012/2013 order wins kept at $300 million. We cut FY2012F by 9% on reduced maintenance margins; FY2013F is raised by 11%, on sustainable project margins of 26%.

"We peg PEC's target price of 90 cents on 7x FY12 PE, in line with its historical average (prev 6x PE plus net cash). Despite the support of its net cash of 62 cents per share, upside potential is also limited by the lack of visible catalysts, muted earnings growth, and limited visibility on order flows. DOWNGRADE TO HOLD.

ComfortDelGro's target price lowered to $1.54 by Barclays Research on high licensing charge

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: Barclays

Price Call: BUY

Target Price: 1.54

The Land Transport Authority (LTA) of Singapore has awarded the operating license of the country’s next urban line - Downtown Line (DTL) to SBS Transit - to SBS Transit, ComfortDelGro’s 75%-owned subsidiary.

But Barclays Capital Research says in a Aug 30 report that the licensing charge at $1.6 billion is too high.

“The DTL is approximately twice the size of the NEL by length as well as number of stations. We expect the NEL, currently running at approximately 80% utilisation, to generate $31 million operating profit in 2011E. Assuming a similar profitability, we expect the DTL to generate approximately $60 million operating profit at 80% utilization, which is still far off the average annual licensing charge of $84 million.”

Barclays Capital expects earnings to stay flat till 2014 and has cut its price target for ComfortDelGro to $1.54.

“To arrive at a fair DCF valuation of the shares, we have factored in the $1.6 billion licensing charge by assuming a one-off charge of $1.6 billion in 2023 -- the mid point of the licensed period. We expect the cash outflow relating to the DTL licensing charge will outweigh the additional operating cash flow from the DTL operation.”

However Barclays Capital adds that if the LTA defers the licensing charge of the DTL towards the end of the licensed period or revises down the licensing charge later on, the stock could see a valuation upgrade.

UOL Group rated 'buy' by DBS

Stock Name: UOL
Company Name: UOL GROUP LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 5.27

DBS Vickers Securities in an Aug 25 research report says: "UOL has a resilient business model comprising residential development (27% of RNAV), strong recurring income from leasing (28%), hotel operations (17%) and dividends from quoted investments (28%).

"UOL will benefit from the redevelopment of UIC Building, through its 42.7% stake in UIC. The mixed residential/commercial development is expected to start construction early next year and the residential portion to be launched in 1H12. We reckon UIC could realize an estimated $172m gains from this project over its existing carrying book cost.

"UOL is trading at a 26% discount to RNAV of $6.20 and offers 16% upside to our target price of $5.27, pegged at a 15% discount to asset backing. Our RNAV values the quoted equity component based on our target prices. Using the latest traded prices, this figure would be even higher at $5.35. BUY"

TPV Technology downgraded to 'neutral' by CIMB

Stock Name: TPV
Company Name: TPV TECHNOLOGY LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 0.58

CIMB in an Aug 25 research report says: "2Q11 net profit of US$28 million (-36% y-o-y) is about 21% below consensus and our forecasts as higher-than-expected GP margins were pulled down by lower-than-expected sales and a higher opex ratio.

"1H11 net profit of US$70 million forms 40% consensus and 39% of our full-year forecasts. We cut our FY2011-2013 profit forecasts by 12-20% to assumer lower LCD-TV sales and margins. We also apply the low end of its P/BV valuations back in FY08 when its earnings slipped to derive our new target price of 58 cents (down from 95 cents, 0.95x P/BV) in view of its near-term unexciting outlook.

"Although the stock is not expensive, we see little positive news flow for a re-rating. DOWNGRADE TO NEUTRAL."

Frasers Centrepoint Trust rated 'outperform' by CIMB

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: CIMB

Price Call: BUY

Target Price: 1.63

CIMB in an Aug 25 research report says: "FCT has released its circular for its Bedok Point acquisition. While NPI yields and accretion could come in below our expectations, we see upside from leasing out the remaining space of Bedok Point and improved stock liquidity.

"We cut our DPU estimates by 3-4% on assuming a lower payout of management fees in units but still have not yet factored in the acquisition given a lack of sufficient clarity on funding.

"Following our DPU adjustments, our DDM-based target price dips to $1.63 (discount rate 8.4%) from $1.67. FY12 DPU yields of 6.4% appear highly attractive against resilient suburban retail exposure and a good balance sheet. MAINTAIN OUTPERFORM."

Tiong Woon Corp Holdings rated 'sell' by DMG

Stock Name: TiongWoon
Company Name: TIONG WOON CORP HOLDING LTD

Research House: DMG

Price Call: SELL

Target Price: 0.19

DMG & Partners Research in an Aug 25 research report says: "Tiong Woon (TWC) plunged deeper into the red in 4QFY11, from a loss of $0.2 million in 3QFY11 and a profit of $2.8 million in 4QFY10 to a loss of $0.7 million.

"Consequently, we have cut our FY2012 earnings forecasts by 90.4% to $1.6 million, on the back of lower turnover and gross profit margins. A dividend of 0.4 cents per share was declared for FY2011 (yield of 1.5%), unchanged from the previous year. While TWC's balance sheet remains strong, there is a lack of near term catalyst.

"In addition, with concerns of another economic slowdown looming, there might be more project delays going forward. We have lowered our fair value to 19 cents, based on 0.3x FY12 P/B (the trough level TWC traded at during the last global financial crisis). MAINTAIN SELL."

Raffles Education Corp rated 'buy' by Kim Eng

Stock Name: Raffles Edu
Company Name: RAFFLES EDUCATION CORP LTD

Research House: Kim Eng

Price Call: BUY

Target Price: 0.80

Kim Eng Research in an Aug 25 research report says: "Excluding exceptional items such as forex loss, fair value gain and tax on revaluation, Raffles Education's 4QFY Jun11 results were largely in line with our expectation.

"On a full-year basis, we estimate its core profit from the education business to be about $21.8 million (-40.4% y-o-y). In any case, we believe the market has already discounted the uninspiring FY Jun11 results. The group has proposed a final dividend of 0.45 cents (total payout of 0.90 cents per share for the whole year), which translates to an annualised yield of 2.1%.

"Sum-of-the-part-based target price of 80 cents. Near-term re-rating catalysts include successful monetisation of OUC and faster-than-expected recovery in student numbers. MAINTAIN BUY."

Market Pulse: PEC, Karin Tech (26 Aug 2011)

Stock Name: PEC
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.

DnB Nor upgrades Keppel, SembMarine to buy

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: DnBNOR Markets

Price Call: BUY

Target Price: 10.00

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: DnBNOR Markets

Price Call: BUY

Target Price: 4.70

DnB Nor Markets has upgraded Singapore oil rig builders Keppel Corp (KPLM.SI) and Sembcorp Marine (SCMN.SI) to “buy” from “hold.” However, it has cut Keppel’s target price to S$10.00 from S$10.65 and Sembcorp Marine’s to $4.70 from $5.30.

Keppel’s shares have fallen 22% since early August, while Sembcorp Marine’s have lost 30% in the same period, which represents a good entry point for investors, DnB Nor said. 

“We expect the offshore and marine ordering cycle to normalise, with sufficient demand to fill the slots at top-end yards such as Sembcorp Marine and Keppel,” DnB Nor said in a report.

However the brokerage noted that risks for investors include further weakness in the equity markets, which would put downward pressure on their shares.

“We argue that the current market outlook for the offshore industry remains positive and that the oil and gas cycle is longer-term in nature, with oil companies looking beyond short-term volatility,” said DnB Nor.

At 9:31 a.m., shares of Keppel were 0.7% lower at $0.855, and have fallen about 17% since the start of the year.

Shares of Sembcorp Marine fell 3.2% at $3.67, and have dropped 31.5% since the beginning of the year.

UE E&C rated 'hold' by OCBC

Stock Name: UE E&C
Company Name: UE E&C LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 0.41

OCBC Investment Research in an Aug 22 research report says: "UE E&C is a medium-sized construction and engineering group with three main divisions: (i) construction (FY10: 85% of total revenue), (ii) mechanical and electrical (M&E) engineering (8%) and (iii) others (7%), including property development and rental/supply of tiles and industrial equipment.

"In our view, UE E&C is a well-managed company with an established track record in construction and M&E engineering industries. However, it appears to suffer from a lack of market attention, presumably because of its small market size and concerns whether a slowdown in Singapore's property market would spill over to the construction sector.

"We value UE E&C at 3x its forward EPS (33% discount to the industry average PER of 4.5x) to obtain a fair value estimate is 41 cents. HOLD (initiating coverage)."

CH Offshore upgraded to 'buy' by DBS

Stock Name: CH Offshore
Company Name: CH OFFSHORE LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.49

DBS Vickers Securities in an Aug 24 research report says: "On the back of strong operating cash flows, CHO's net cash position of US$43.3 million at end FY2011 is equivalent to 21% of its current market cap.

"CHO has reverted to a dividend payout ratio more consistent with pre-FY2009, with a 47% payout in FY2011, or dividend per share of 2.75 cents, implying a yield of 7.6% at current price levels. We cut FY2012/2013F by 21%/15% on reduced day rate assumptions.

"CHO currently trades at 6.6x FY2012 PE and 0.88x FY2011 P/BV, close to -1.5SD from its historical average valuations. Our target price is reduced to 49 cents (prev 60 cents) in line with a lowered FY2012F and an adjusted USD/SGD exchange rate. UPGRADE TO BUY."

CNA Group rated 'sell' by DMG

Stock Name: CNA
Company Name: CNA GROUP LTD.

Research House: DMG

Price Call: SELL

Target Price: 0.14

DMG & Partners Research in an Aug 22 research report says: "CNA's 2Q11 net profit was in line at $0.4 million, down 81.3% y-o-y, mainly attributable to the absence of contribution from its associate Standard Water Ltd (SWL), which was sold in 3Q10.

"We note signs of CNA turning around - 2Q11 revenue has grown 11.7% y-o-y, 15.7% q-o-q and a $0.8 million profit from 2Q11's operations (+95.5% q-o-q) versus a loss of $0.6 million last year. An update on its Middle East (ME) receivables - CNA has initiated arbitration proceedings for the $43.4 million receivables outstanding on the Dubai racecourse project.

"However, in the absence of a strong near-term catalyst, investors will probably take a while before revisiting this stock. Target price of 14 cents, based on 11.9x FY11 earnings (its 6-year historical average). MAINTAIN SELL."

Conscience Food Holdings rated 'buy' by DBS

Stock Name: Consciencefood
Company Name: CONSCIENCEFOOD HOLDING LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.35

DBS Vickers Securities in an Aug 22 research report says: "We expect sequential improvement in margins as seen in 2Q on lower raw material prices. As ASP increase filters through, we expect gross margins to improve sequentially, which will aid in net profit growth, projected at 32% for FY11F.

"2Q11 results (+21% y-o-y) were within consensus, but below our aggressive estimates. This came about on lower than expected sales volumes, as we had expected strong 1Q growth of 48% y-o-y to continue into 2Q. We have adopted a more conservative stance in our earnings estimate, and trimmed our FY11F/12F earnings forecasts by 11%/23%.

"Our target price is maintained at 35 cents (7xPE), as we roll our valuations to FY2011/2012F earnings. CSF currently trades at a pedestal 4.9x FY11F PE with a PEG of <0.2x, compared with peers' average PE of 16x. MAINTAIN BUY."

FJ Benjamin Holdings rated 'buy' by Kim Eng

Stock Name: FJBen
Company Name: F J BENJAMIN HOLDINGS LTD

Research House: Kim Eng

Price Call: BUY

Target Price: 0.39

Kim Eng Research in an Aug 23 research report says: "FJ Benjamin (FJB) delivered net profit of $13.0 million (+56.9% y-o-y) on revenue of $353.9 million (+22.3% y-o-y) for FY Jun11. Excluding forex losses and exceptional items, the results were largely in line with our forecasts.

"A dividend of 2 cents per share was also declared, which translated to an attractive yield of 6.3%. Despite FJB's in-line FY Jun11 performance, we cut our FY Jun12F-14F profit by 10-15% as we expect the current economic uncertainties to eventually dampen consumer demand in Asia. Peer valuation also has declined.

"Our target price is pegged to the stock's five-year average PER of about 15x on FY Jun12F EPS, thus lowering it to 39 cents (previously 50 cents). MAINTAIN BUY."

Neptune Orient Lines rated 'neutral' by Nomura

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: Nomura

Price Call: HOLD

Target Price: 1.65

Nomura Research in an Aug 23 research report says: "NOL P7 monthly container revenue continued to sequentially decline (-11% y-o-y, the first month of double-digit negative growth). However, average freight rate sequentially rebounded (+1.8% p-p) due to cargo mix and bunker surcharges.

"We expect volumes and freight rates to sequentially improve in August due to partially successful peak season surcharge. This along with lower bunker prices will lead to lower 3Q losses, but we still expect 2H11 losses. With NOL reporting a 1H11 net loss of US$67 million, our earnings are under review given we are only estimating a full-year loss of US$73 million.

"Our revised price target of $1.65 is based on sum-of-the-parts valuation. We value the shipping business using mid cycle minus 1 standard deviation of 0.7x for FY11F and apply a 8x EV/EBITDA multiple to the port business. NEUTRAL."

Market Pulse: Raffles Education & PEC (25 Aug 2011)

Stock Name: PEC
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.

PEC falls on weak earnings

Stock Name: PEC
Company Name: PEC LTD.

Research House: CIMB

Price Call: HOLD

Target Price: 0.93

Shares of Singapore oil and gas services firm PEC Ltd (PECL.SI) fell as much as 9% on Thursday to a one-year low after the company reported weak quarterly earnings.

At 10:53 a.m., PEC shares were down 7.3% at $0.83 with 2.8 million shares changing hands. This was nearly five times its average daily volume over the last five sessions.

PEC said on Wednesday its net profit fell 64% in the fourth quarter to $3.5 million, hurt by a drop in sales and losses from joint ventures.

CIMB Research downgraded the stock to neutral from outperform and cut its target price to $0.93 from $1.58, citing weaker-than-expected earnings due to losses from associates.

The brokerage also lowered its earnings estimates for PEC for fiscal 2012-2013 by 25-28%.

RBS cuts Mapletree Logistics to hold vs buy

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: RBS

Price Call: BUY

Target Price: 0.91

RBS has downgraded Singapore’s Mapletree Logistics Trust (MAPL.SI), which owns warehouses and other logistics properties, to hold from buy and cut its target price to $0.91 from $1.14.

Capital values for logistics properties in Singapore are at their highest levels since 1997, which will make it hard for Mapletree Logistics to make accretive acquisitions in Singapore, RBS said.

“In the current acquisition climate, we expect Mapletree Logistics to find it tough to achieve significant income growth. We believe its high gearing of 41 percent has cast an overhang on the stock with the market appearing to be factoring in an upcoming equity fund-raising exercise,” RBS said in a report.

The brokerage has also lowered its rental growth forecasts for industrial properties in 2011-2013 to 1-5% from 5-10%.

At 11:05 a.m., shares of Mapletree Logistics were flat at $0.835, and have fallen 12.6% since the start of the year.

Credit Suisse cuts target on Olam to $3.70

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: Credit Suisse

Price Call: BUY

Target Price: 3.70

Credit Suisse has lowered its target price on Singapore commodities trader Olam International (OLAM.SI) to $3.70 from $4.19 to reflect the 13% dilution from the company’s equity-raising exercise in June.

But the bank maintained its outperform rating on Olam stock.

Olam raised around $740 million through a three-tranche equity fundraising in June, which Credit Suisse said has resulted in a 13% dilution.

However, the bank said Olam was trading at a price-to-book of 2.0 times, close to the lows hit in 2008-2009, and this did not reflect the solid fundamentals of the company.

Credit Suisse expects Olam to report strong fourth-quarter results on Aug 29. It estimates that for Olam’s 2011 fiscal year ended June, the company will report a 29% year-on-year growth in core net profit on the back of 16% volume increase.

It added that it believes Olam has sufficient investment firepower to fund its growth initiatives over the next three years and it expects the company to announce further value-accretive deals in the medium term.

At 10:37 a.m., Olam shares were flat at $2.21. The stock has lost around 29 percent so far this year, hit by concerns about falling demand for commodities amid a weakening global economy.

Daiwa downgrades Sembcorp Marine, cuts Keppel target

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD

Research House: Daiwa

Price Call: HOLD

Target Price: 3.81

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: Daiwa

Price Call: BUY

Target Price: 10.24

Daiwa Capital Markets has downgraded oil-rig builder Sembcorp Marine (SCMN.SI) to hold from outperform and cut its target price to $3.81 from $6.05.

The brokerage also lowered its target price for Keppel Corp (KPLM.SI) to $10.24 from $13.69 and kept its outperform rating.

Daiwa said the rig building sector is likely to derate due to the increased likelihood of a recession, but Sembcorp Marine's outlook is less positive than Keppel's as the former faces greater earnings risk due to its lower order book.

Keppel has an order book of $9.1 billion compared with $5.6 billion for Sembcorp Marine, but Daiwa has lowered its 2012-2013 earnings per share estimates for Keppel by 1-6% to reflect lower forecasts for property income and order wins.

At 10:40 a.m., shares of Keppel were 1.6% lower at $8.60, and have fallen 16.4% since the start of the year.

Sembcorp Marine shares were 1.5% lower at $3.89, and have lost about 28% since the beginning of the year.

UOBKH - OUE SP: Unwinding of OUE share financing transaction removes overhang

Stock Name: OUE Ltd
Company Name: OVERSEAS UNION ENTERPRISE LTD

Research House: UOB KayHian

Price Call: BUY

Target Price: 2.14

Overseas Union Enterprise (OUE SP) BUY
Price/Tgt: S$2.14/S$3.65 Mkt Cap: S$2,101m/ US$1,628m Daily Vol: US$6.5m 1-Yr Hi/Lo: S$3.65/S$1.99

Unwinding of OUE share financing transaction removes overhang



OUE's controlling shareholder, Golden Concord Asia Limited ("GCAL") announced the unwinding of the financing transaction entered in Jan this year. As a part of the unwinding, GCAL will receive approximately 13m OUE shares and relinquish the right of return of the 53.3m OUE shares.The transaction will result result in GCAL's effective interest in OUE reduce by 4.11% to 62.98%. The unwinding will not have any material impact and would not result in any actual sale of shares by GCAL in OUE. Management noted that it has entered into no other derivative transactions in relation to OUE and has no intention of entering into any further derivative transactions involving OUE. The details have been attached for your reference.

Impact.In short, the complicated financing transaction effectively simplifies to a share placement of 42.6m or 4.11% of GCAL's OUE shares by Credit Suisse at S$3.35 per share on 20 Jan this year. This will reduce GCAL's effective stake in OUE from 67.07% to 62.98%. Post the transaction, Credit Suisse will not have any outstanding OUE shares pertaining to the financing arrangement. We view the simplification of the transaction positively as it had been an overhang on OUE's share price performance. The share price has fallen 40% post the financing transaction under-performing the FSSTI by 26% to date.

Valuation. OUE is trading below its post-08 crisis levels based on its current P/B multiples. We maintain our BUY recommendation with a target price of S$3.65 pegged at 15% discount to its FY11 RNAV of S$4.30/share.

Market Pulse: Swiber (24 Aug 2011)

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.51

Market Pulse: Swiber (24 Aug 2011)

FOCUS

Swiber Holdings: Kreuz secures US$25m contract with option

Summary: Swiber Holdings (Swiber) announced that its 63.17%-owned unit, Kreuz Holdings, has secured a US$25m contract with a US$10m option from a leading offshore construction company in the Middle East. Swiber will be utilizing its in-house fleet of vessels to perform the full spectrum of projects comprising subsea installation works. Swiber has clinched new orders worth US$432m YTD, helped by its enlarged vessel fleet and growing capabilities. However, it has disappointed the market with its core earnings and along with weaker market sentiment, its share price has fallen such that the stock is now trading at about 0.6x P/B, close to its 2009 low of 0.3x book. Net debt-to-shareholder equity has also risen from 0.95 in 1Q09 to 1.17 in 2Q11. Companies with relatively high leverage are generally more vulnerable in an environment with increasing macroeconomic risks and market volatility, and we lower our peg from 11x to 10x blended FY11/12F core earnings, reducing our fair value estimate to S$0.51 (prev. S$0.56). Maintain HOLD. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor detailed report.

NEWS HEADLINES

- China factory sector slowed down for a second consecutive month in August on the back of sluggish overseas demand, HSBC's China Flash PMI showed.

- Spot gold rose to an unprecedented US$1,900 an ounce before falling back to US$1,877 yesterday.

- Singapore's inflation for July was 5.4%, higher than the consensus estimate of 5%, mainly due to jumps in housing and transport costs. On a seasonally adjusted basis, CPI rose 0.6% MoM from June's 0.4%.

- The chief executive of Asia Environment (AsiaEnv) has launched a bid to privatize the company through a special purpose vehicle called Ciena Enterprises (Ciena). For every AsiaEnv share that it does not own, Ciena is offering 30 cents in cash or one share in Ciena.

- United Envirotech has received in-principle approval from SGX to list up to 305m new shares for its proposed US$113.8m convertible bond issue in the event of conversion.

- Lippo Group, the controlling shareholder of OUE, has unwound a derivative trade that is said to have possibly caused market confusion over the share price of OUE.

- Technics Oil and Gas announced yesterday that it has secured two contracts worth a total of S$8.5m.

CapitaMalls Asia rated 'buy' by Phillip Securities

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: Phillip Securities

Price Call: BUY

Target Price: 1.76

Phillip Securities Research in a Aug 19 research report says: "CMA announced that it has entered into conditional agreements to acquire the remaining 50% stakes each in Minhang Plaza and Hongkou Plaza in Shanghai for about $949.7 million in total.

"CMA's post-acquisition effective stakes in the properties will be 65% (previously 15%) and 72.5% (previously 22.5%) respectively. We adjust our estimates to factor in the acquisitions and RNAV is increased from $1.94 to $2.07.

"However, we ascribe a higher discount to RNAV of 15% (previously 10%) to reflect the current uncertain market sentiment due to concern over the Euro zone debt crisis and health of the US economy. Consequently, fair value is raised marginally from $1.75 to $1.76, representing a potential upside of 49.8% to its latest closing price. MAINTAIN BUY."

Overseas Union Enterprise rated 'outperform' by Credit Suisse

Stock Name: OUE Ltd
Company Name: OVERSEAS UNION ENTERPRISE LTD

Research House: Credit Suisse

Price Call: BUY

Target Price: 3.28

Credit Suisse in an Aug 17 research report says: "OUE share price has underperformed even its office peers, as it fell 14% since Aug 5, and is back to Mar 2010 levels when prime Grade A office rents bottomed and which have since recovered 31%.

"It is now trading at a 50% discount to our RNAV of $4.67, the steepest discount in our coverage universe. While leasing risks have increased on its One Raffles Place Tower 2, which is still not pre-committed ahead of its target completion in 4Q11, we estimate it only makes up 6% of its RNAV.

"Its OUE Bayfront is already 77% committed and achieving latest rents of $13/sqft. Our sensitivity test shows that even if property prices/rents across all segments fall 20%, its RNAV will fall to $3.28, still a 40% upside to the current stock price. MAINTAIN OUTPERFORM."

Mermaid Maritime PCL rated 'outperform' by CIMB

Stock Name: Mermaid
Company Name: MERMAID MARITIME PUBLIC CO LTD

Research House: CIMB

Price Call: BUY

Target Price: 0.49

CIMB in an Aug 19 research report says: "We took Mermaid's new CEO, Mr Denis Welch and its investor relations head Mr Howard Woon on a one-day NDR in Singapore. Refreshingly candid, management acknowledged its past mistakes and updated investors on Mermaid's current business operations.

"While investors generally agreed that the current share price provides value, we sense that most are also adopting a "wait-and-see" approach. Nonetheless, the key investment case lies in its current trading price which is below break-up value.

"There are no changes to our earnings estimates or target price of 49 cents, still based on 0.8x CY11 P/BV. Improvements in quarterly results may win investors over while mid-term catalysts could come from contracts for its newbuild jack-ups. MAINTAIN OUTPERFORM.'

Sapphire Corporation rated 'increase exposure' by SIAS

Stock Name: Sapphire Corp
Company Name: SAPPHIRE CORPORATION LIMITED

Research House: SIAS

Price Call: BUY

Target Price: 0.60

SIAS Research in an Aug 22 research report says: "Gross profit reached $8.3 million in 2Q FY2011 (up 23% q-o-q, 45.5% y-o-y).

"Sapphire's 2Q 2011 results showed several positives (a) operating profit grew by 28.1% q-o-q and 57.8% y-o-y to reach $5.1 million in 2Q, (b) its hedge to ring-fence its exposure to China VTM shares turned profitable, (c) its mineral trading segment resumed revenue contribution, which will continue into 3Q on the back of new orders and (d) it re-collected $24.6 million of loan receivables and advances, raising cash to $37.2 million.

"These developments justify our valuation of 60 cents per share on Sapphire. MAINTAIN INCREASE EXPOSURE."

Armstrong Industrial Corp upgraded to 'hold' by Kim Eng

Stock Name: Armstrong
Company Name: ARMSTRONG INDUSTRIAL CORP LTD

Research House: Kim Eng

Price Call: HOLD

Target Price: 0.29

Kim Eng Research in an Aug 19 research report says: "As the global supply chain gets back on its feet following the March 2011 Japanese earthquake, Armstrong should get a reprieve in 2H11.

"But given the continued weakness in China auto sales and the US$, the recovery is not expected to erase 1H11's 57% profit decline and y-o-y growth could remain in the negative territory. However, we believe the stock has factored in the poor operating environment.

"At 7x FY12F earnings and almost 8% yield (based on $0.02 final dividend per share). Target price of 29 cents as we roll over to FY12 earnings, still at 8x PER. We believe the poor operating environment has already been factored into the share price. UPGRADE TO HOLD."

Global Palm Resources Holdings rated 'hold' by OCBC

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.21

OCBC Investment Research in an Aug 19 research report says: "Revenue jumped 61% y-o-y to IDR86.6 billion, underpinned by improved harvest (both from its own plantation and higher volumes purchased from third party) and buoyant selling prices of CPO and palm kernel; GPR achieved an ASP of IDR7586/kg, versus IDR6455 in 2Q10, but lower than IDR7706 in 1Q11.

"As a result, net profit also surged 111.5x y-o-y to IDR19.8 billion; it was also up 33% q-o-q. Given that the slow pace of expansion is likely to continue for the foreseeable future, implying very limited earnings growth potential, we cut our valuation peg from 16x FY11F EPS to 10x blended FY11/FY12F EPS, which in turn drops our fair value to 21 cents (32.5 cents previously). MAINTAIN HOLD."

Raffles Medical Group upgraded to 'buy' by OCBC

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.50

OCBC Investment Research in an Aug 19 research report says: "Raffles Medical Group's (RMG) recent 2Q11 results were within our expectations, with revenue and net profit growing 14.3% and 10.1% y-o-y to $67.0 million and $11.6 million respectively.

"We reckon that RMG remains an attractive destination for wealthy medical tourists, given the relatively inelastic demand for healthcare services, coupled with the quality and complexity of procedures offered. Management guided that it would at least be maintaining its current level of dividends as a reward to its shareholders.

"In light of increasing uncertainty over the macro economy, we believe that the defensive nature of RMG's earnings would provide a safety net for investors. Our fair value estimate of $2.50 is based on 24x blended FY2011/FY2012F EPS, which implies a potential upside of 12.6%. UPGRADE TO BUY."

Kingsmen Creatives rated 'buy' by DMG

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD

Research House: DMG

Price Call: BUY

Target Price: 0.76

DMG & Partners Research in an Aug 19 research report says: "Kingsmen achieved revenue of $57.1 million (-11.6% y-o-y) and PATMI of $4.5 million (-2.8% y-o-y) in 2Q11.

"The decline was largely attributed to the absence of major projects (in 2Q10, there weresome billings from the Shanghai World Expo and Universal Studios). This has however, led to gross margins improving to 29.5% (2Q10: 27.6%), as margins from work done for the events/shows were generally lower.

"Outlook remains healthy despite the global economic uncertainty as (1) large retail players are still coming to Asia and (2) the theme parks planned for the Asian region are progressing on track. Kingsmen declared dividends of 1.5 cents per share for 2Q11. Target price of 76 cents, pegged to 9x FY11F earnings. MAINTAIN BUY."

Credit Suisse cuts STX Pan Ocean to $6.90

Stock Name: STXPO 100
Company Name: STX PAN OCEAN CO., LTD.

Research House: Credit Suisse

Price Call: HOLD

Target Price: 6.90

Credit Suisse has cut its target price for Singapore-listed South Korean shipping firm STX Pan Ocean (STXPx.SI) to $6.90 from $12.35 and kept its neutral rating.

“Faced with a weaker global economic outlook, coupled with severe oversupply, we expect STX Pan Ocean to be loss-making in 2011-2012 on low freight rates,” said Credit Suisse in a report.

The brokerage expects the firm to turn in a loss of US$41.8 million ($50.8 million) for 2011 and with a planned capital expenditure of US$2.3 billion in the next two years, STX Pan Ocean’s balance sheet will deteriorate.

The company is also likely to face rising financing costs, in light of the growing financial turmoil in the markets and tighter bank financing, Credit Suisse said.

At 9:50 a.m., shares of STX Pan Ocean were 1.7% higher at $8.00, The shares have fallen 39% since the start of the year.

ASL Marine Holdings rated 'hold' by DBS

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.59

DBS Vickers Securities in an Aug 18 research report says: "FY2011 recurring net profit of $31.9 million (-14% y-o-y) was within expectations. Revenue declined 22% to $363.2 million due to (1) lower shipbuilding orderbook; (2) fewer large conversion jobs; and (3) weaker demand for towing jobs.

"Net gearing inched up to 0.61x vs. 0.37x a year ago and may edge higher towards 0.68x by end FY12 as 20/80 payment terms to customers become increasingly common. A final DPS of 1.5 cents was declared, translating into a full year payout ratio of 20% or a yield of 2.9%.

"We trim our FY2012/2013F earnings by around 5% each as we adjust the recognition schedule for ASL's shipbuilding orderbook. Target price is lowered to 59 cents (from 63 cents), still pegged to 8.2x FY12 PE. MAINTAIN HOLD."

DBS Vickers (Spore) Singapore Telecom Companies: Sector offers >6% yield,2Q11Review

Stock Name: StarHub
Company Name: STARHUB LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 3.05

Stock Name: M1
Company Name: M1 LIMITED

Research House: DBS Vickers

Price Call: HOLD

Target Price: 2.60

Stock Name: SingTel
Company Name: SINGTEL

Research House: DBS Vickers

Price Call: HOLD

Target Price: 3.20

Singapore Telecom Companies: Sector offers >6% yield, 2Q11 Review




· M1's higher gearing and weak free cash flow may limit earnings payout to
80%, below last year's 100%.

· SingTel continues to gain mobile revenue share while StarHub is gaining
non-mobile subscribers despite absence of English Premier League rights.

· StarHub is our top pick, trading at 7.4% yield (fixed 20 Scts DPS) versus
6% for M1 & SingTel.

A quick recap of 2Q2011 results. M1 & StarHub reported in-line earnings
while SingTel's earnings were 5% below our expectations. SingTel
disappointed on lower than expected earnings contribution from Bharti and
Optus. Bharti was hit by 3G rollout costs and higher tax rate in India.
Optus, on the other hand, witnessed higher mobile competition as smaller
player VHA joined market share battle with incumbent Telstra.

StarHub (Buy, TP: S$3.05) is our top pick. StarHub's free cash flow is
likely to be ~120% of FY11F earnings, as the company pays minimal cash tax
due to its deferred tax assets. StarHub has a fixed dividend policy of 5
Scts per quarter for FY11F. We believe this will be maintained in the
coming years.

StarHub impressed in the non-mobile segment. Despite loss of EPL and ESPN
rights, StarHub continued to gain pay TV subscribers with sequentially
stable ARPU. Moderate subscriber growth in the broadband segment and
stable ARPU also demonstrated solid execution.

M1 (Hold, TP: S$2.60) may not gear up significantly above its peers. At the
end of 2Q11, M1 had net debt to annualized EBITDA of 1.1x versus 0.7x for
StarHub and SingTel each as shown in the chart on the side. M1's gearing
spiked from borrowing S$81m to partly pay for FY10 dividends, as its free
cash flow was very weak. Even FY11F free cash flow may be ~70% of FY11F
earnings due to fair value accounting for handsets. In our view, investor
should expect 80% earnings payout ratio.

SingTel (Hold, TP: S$3.20) continued to gain mobile revenue share in
Singapore. This was driven by more attractive lineup of handsets and
devices offered slightly ahead of peers, focus on pushing data SIM cards by
bundling them with fixed broadband service and attractive discounts to
subscribers on re-contracting. Peers do not emulate these tactics lest
market should become more competitive.



-----------------------------------

Yamada Green Resources rated 'buy' by DMG

Stock Name: Yamada
Company Name: YAMADA GREEN RESOURCES LIMITED

Research House: DMG

Price Call: BUY

Target Price: 0.32

DMG & Partners Research in an Aug 16 research report says: "2Q11 net profit of RMB7.4 million (+12% y-o-y; -89% q-o-q) was above our RMB5 million projection amid a seasonally low quarter as a result of higher 2Q revenue of RMB55 million (our estimate: RMB48 million) with RMB5 million maiden contribution from black fungus.

"With new farmland acquisition of 840mu in Jun11, we revise our farmland assumption up to 5,134mu, resulting in higher FY11F-FY12F earnings estimates of RMB146 million-RMB193 million respectively. However, we reduce our target multiple to 4.5x FY11F P/E on the back of weak sentiment towards small cap S-Chips counters.

"We continue to expect strong 4Q11 net profit growth of 78% to RMB72 million to provide the next upside catalyst, though share price is likely to remain flattish during a seasonally low-key 3Q. Target price reduce to 32 cents. MAINTAIN BUY."

SC Global Developments rated 'buy' by DBS

Stock Name: SCGlobal
Company Name: SC GLOBAL DEVELOPMENTS LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.81

DBS Vickers Securities in an Aug 15 research report says: "SC Global's 88% jump in 2Q earnings to $46.3 million was due to recognition of progressive billings from the completion of The Hilltops development, which received TOP in Q2, as well as additional sales at The Marc, Seven Palms and Martin 38.

"One unit at The Marc was sold at a record $5,842psf (42% sold) as well as one unit at Seven Palms at $3,606psf. Martin 38 enjoyed higher take up rate of 73% vs 64% a quarter ago. In addition, AV Jennings recorded 34% increase in net profit to A$12.9 million for FYE June 2011.

"The stock is trading at 58% discount to our revised RNAV of $2.79, adjusted to account for lower share price of AV Jennings and at 0.76x P/BV. Our target price of $1.81 is pegged to the long term average discount of 35% to asset backing. MAINTAIN BUY."

Gallant Venture rated 'buy' by DBS

Stock Name: Gallant
Company Name: GALLANT VENTURE LTD.

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.88

DBS Vickers Securities in an Aug 15 research report says: "Gallant Venture (GALV) reported 2Q11 PATMI of $0.3 million on the back of 18% y-o-y drop in topline to $48.5 million. This was mainly attributable to lower electricity revenue, due to lower demand and electricity tariff compared to a year ago and no lands sales.

"PATMI was also boosted by write-back of over-provision of withholding and corporate income taxes. We continue to see value in GALV and expect the group to unlock further value from land sales - Lagoi Bay Mall remains on track for completion by end 2011/1Q12 and we expect substantial gains from its opportunistic investment projects in PT SILO and its Shanghai property development when completed in 2012/2013.

"Target price of 88 cents based on sum-of-the-part. MAINTAIN BUY."

Hutchison Port Holdings Trust rated 'buy' by DBS

Stock Name: HPH Trust US$
Company Name: HUTCHISON PORT HOLDINGS TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.05

DBS Vickers Securities in an Aug 16 research report says: "Operating statistics for ports co-owned by Cosco Pacific and HPH Trust indicate that Yantian throughput volumes fell 2.9% y-o-y in July 2011.

"This is in line with our expectations as we have already highlighted that y-o-y growth rates in July and August will not make for good reading, owing to the early onset of the peak shipping season in 2010.

"We would prefer to look beyond the near term weakness in Yantian Port's operating numbers and advise investors to accumulate the Trust at current bombed-out valuations (8.0% FY2011 and 8.7% FY2012 dividend yield). Target price of $1.05. MAINTAIN BUY."

Valuetronics Holdings rated 'buy' by UOB KayHian

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 0.33

UOB KayHian in an Aug 16 research report says: "Valuetronic's (VHL) 1Q12 revenue grew 33.4% y-o-y to HK$527.1 million largely due to growth in the OEM and ODM segments. Net profit grew by 9.5% y-o-y to HK$31.6 million, proportionally slower than revenue due to increased fixed costs arising from the expansion of the licensing business.

"Gross profit margin declined marginally from 16.7% in 1Q11 to 16.0% in 1Q12, attributed to a change in product mix. We maintain our earnings estimates, expecting 12.8% and 14.2% y-o-y growth in FY2012F and FY2013F respectively. A lower target price of 33 cents (previously 34 cents), adjusting for a weaker Hong Kong dollar against the Singapore dollar.

"Our target price is pegged to 5.5x FY12F PE, a 31.5% discount to peers' average FY12F PE of 8.0x (excl. Foxconn). We estimate that the stock is trading at 10.3% FY2012 dividend yield. MAINTAIN BUY."

OCBC ups Kingsmen Creatives target to $0.71

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.71

OCBC Investment Research has raised its target price for Kingsmen Creatives to S$0.71 from $0.575 and kept its hold rating.    

Kingsmen Creatives said its second-quarter net profit fell 2.8% to $4.5 million from $4.6 million a year ago.

However, OCBC said Kingsmen Creatives’ earnings exceeded its expectations and it expects the firm to see a stronger second half performance due mainly to increased demand from its retail clients before the year-end festive season.

Kingsmen’s order book remains healthy, with total contract wins amounting to about $197 million as at Aug 10, OCBC said.

The brokerage has raised its earnings estimates for Kingsmen by 18.9% for 2011 to account for higher gross profit margins.  

At 9:31 a.m., shares of Kingsmen were 1.8% higher at $0.565, and have fallen 1.7% since the start of the year.

Pan United Corporation rated 'invest' by SIAS Research

Stock Name: PanUnited
Company Name: PAN-UNITED CORPORATION LTD

Research House: SIAS

Price Call: BUY

Target Price: 0.63

SIAS Research in an Aug 15 research report says: "On the back of higher sales volume, better selling prices and effective cost control, Pan-United Corp Ltd's (Pan-U) 2Q FY11 revenue and PATMI grew 27% and 75% y-o-y to $129 million and $8.78 million respectively.

"1H revenue and PATMI formed 51.3% and 56.7% of our FY2011F. There was a slight surprise in profit margin for this quarter owing to sustained gross profit margin and well controlled operating costs. Developments in Indonesia and Vietnam are progressing as per projected and initiatives are taken to minimise losses at the shipping division.

'We will revise our FY2011 forecasts upward should the BBM division continue to maintain its margin. Intrinsic value of 63 cents per share. MAINAIN INVEST."

Q&amp;M Dental Group (Singapore) rated 'increase exposure' by SIAS Research

Stock Name: Q&M Dental
Company Name: Q & M DENTAL GROUP (S) LIMITED

Research House: SIAS

Price Call: BUY

Target Price: 1.00

SIAS Research in an Aug 15 research report says: "Q&M's 2Q FY11 revenue and PATMI rose 22% and 12% y-o-y to $11.2 million and $1.4 million respectively, largely in line with expectation.

"The company continued to expand in China and signed non-binding agreements with Beijing Le Le Jia and Shanxi Meiyuan Medical Technology over the last three months. To date, Q&M had four pending deals in China and the entities are capable of generating approximately RMB40-50 million annually, more than half way mark to achieving their combined target profit of RMB80 million for the China joint ventures.

"We are lowering our FY2011F and FY2012F so as to account for the "delayed" income for the China associates. Q&M also declared 0.6 cents dividend per share for 1H FY2011. Intrinsic value of $1.00. MAINTAIN INCREASE EXPOSURE."

Hong Leong Asia rated 'underperform' by CIMB

Stock Name: HL Asia
Company Name: HONG LEONG ASIA LTD.

Research House: CIMB

Price Call: SELL

Target Price: 1.78

CIMB in an Aug 15 research report says: "2Q11 core net profit of $19.1 million (-41% y-o-y) was below our expectation and the Street's, at 21% of our FY2011 forecast. 1H11 accounts for 41% of our figure. The shortfall stemmed from a weaker-than-expected Xinfei performance which barely broke even.

"We cut our FY2011-2013 core EPS estimates by 19-22%, incorporating cuts in margins and unit sales across the units. We are now expecting a loss for Xinfei this year. Coupled with lower P/E targets for Yuchai and Xinfei on wider discounts and as their peers are de-rated, we reduce our SOP target price from $2.74 to $1.78.

"While its share price has pulled back to near September 2009 levels, we see more downside, expecting de-rating catalysts from weaker-than-expected earnings from Xinfei. MAINTAIN UNDERPERFORM."

Swiber Holdings rated 'outperform' by CIMB

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 0.65

CIMB in an Aug 15 research report says: "Swiber's 1H11 core net profit of US$14.4 million (-27% y-o-y) forms 71% of our FY11 forecast and is above our expectations due to its stronger-than-expected revenue.

"1H11 net profit of US$17.7 million (-36% y-o-y) accounts for 63% of our full-year forecast and 45% of consensus. The tendering pipeline remains positive with US$377 million worth of orders secured YTD. We raise our earnings forecast by 4-12% to factor in the stronger revenue growth.

"However, in view of the macro uncertainties and weak sentiment for small-caps, our target price is cut from 98 cents to 65 cents. The new target price is now based on 8x CY12 P/E, one standard deviation below the five-year small-mid-cap industrial average vs. 12x, five-year small-mid-cap O&M sector average previously. MAINTAIN OUTPERFORM."

Mewah International rated 'underperform' by CIMB

Stock Name: Mewah
Company Name: MEWAH INTERNATIONAL INC.

Research House: CIMB

Price Call: SELL

Target Price: 0.36

CIMB in an Aug 15 research report says: "2Q11 earnings sank 63% y-o-y and 64% q-o-q to US$6.0 million, taking 1H net profit to US$23.1 million, which, at 21% of our and consensus full-year forecasts, was way below expectations.

"The main culprits were (1) severe margin erosion for all segments as the operating environment deteriorated in tandem with the weakening of crude palm oil price, and (2) lacklustre volumes due to soft demand.

"Slashing our volume and margin assumptions, we chop FY2011-2013 EPS by 63-67%. This reduces our target price from $1.29 (11.5x CY12 P/E) to 36 cents (10.2x CY12 P/E), still based on a 20% discount to peers. DOWNGRADE TO UNDERPERFORM."

Foreland Fabrictech Holdings rated 'buy' by Phillip Securities

Stock Name: Foreland
Company Name: FORELAND FABRICTECH HLDS LTD

Research House: Phillip Securities

Price Call: BUY

Target Price: 0.191

Phillip Securities Research in an Aug 15 research report says: "Revenue was RMB203.3 million (+203.4% y-o-y, +32.4% q-o-q), net profit was RMB38.8 million (+1112.5% y-o-y, +37.1% q-o-q). Revenue and net profit are 38.5% and 41.6% above our estimates.

"This is a record quarter for Foreland in terms of revenue, net profit and sales volume. The outstanding performance is attributed to strong demand for high quality functional fabric. The company has declared an interim dividend of RMB0.027, which is approximately 20% of 1H11 net profit. The company aims to maintain a 20% dividend payout ratio.

"Although market aversion has increased lately, we are keeping our PE peg of 4.35x FY11E earnings and target price of 19.1 cents. We believe Foreland can achieve a record year of profitability. The stock is currently trading at only 2.5x forward earnings. MAINTAIN BUY."

Ziwo Holdings rated ' buy' by Phillip Securities

Stock Name: Ziwo
Company Name: ZIWO HOLDINGS LTD.

Research House: Phillip Securities

Price Call: BUY

Target Price: 0.185

Phillip Securities Research in an Aug 15 research report says: "Revenue was RMB132.8 million (-2.1% y-o-y, +14.7% q-o-q), net profit was RMB22. million (-31.6% y-o-y, +8.2% q-o-q). 2Q11 results came in below our expectations.

"Revenue and net profit are 11.6% and 36.0% lower than our estimates respectively. What attributed to the lower year-year performance are mainly the lower sales volume and higher raw material expenses. We cut our FY11E/12E revenue and net profit by 20.2% and 17.7%, and 10.7% and 26.8% respectively.

"Balance sheet is still very healthy with zero borrowings and cash balance of RMB212.2 million. In view of the heightened risk aversion in the market, we are reducing our PE peg from 5x to 3x blended FY2011E/2012E earnings. This gives us a target price of 18.5 cents. MAINTAIN BUY."

DBS cuts Midas target to $0.72 vs $1.05

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.72

DBS Vickers has cut its target price for Singapore-listed Midas Holdings (MIDA.SI), which manufactures aluminium components for trains, to $0.72 from S$1.05. It maintained its buy rating.

DBS has cut its 2011 and 2012 earnings per share forecasts for Midas by 5% and 9% respectively, after the firm reported second-quarter earnings that were below expectations.

“However, Midas should continue to win more metro and export orders to help cushion the lower orders from the high-speed rail segment, which would lower, but not derail, Midas’ growth,” said DBS in a report.  

The brokerage also said it has lowered its assumptions for Midas' order wins by about 15-20% for this year and in 2012 in view of China's decision to temporarily suspend the examination and approval for new high-speed rail projects.

At 11:15 a.m., shares of Midas were 2.4% higher at $0.425, and have fallen about 54.5% since the start of the year.

OCBC cuts Swiber target to $0.56 vs $0.88

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.56

OCBC Investment Research has cut its target price for Singapore oil and gas services firm Swiber Holdings (SWBR.SI) to $0.56 from $0.88 and kept its hold rating.

OCBC said Swiber's second-quarter, first-half core net profit of US$5.3 million ($6.4 million) after stripping away one-off items such as a gain on asset disposals and fair value gains was lower than expected, mainly due to a fall in its gross margin to 14.7% from 22.1% a year ago.

Swiber said its second-quarter net profit fell 11.6% to US$12.6 million from US$14.3 million a year ago.

However, OCBC noted that Swiber was actively bidding for overseas projects, especially in Southeast Asia, India and the Middle East. 

The company is eyeing potential projects worth about US$3.6 billion in Southeast Asia, the brokerage said.

At 10:44 a.m., shares of Swiber were 4% higher at $0.525, and have fallen about 48% since the start of the year.

Daiwa raises target on Wilmar to $5.50; keeps hold

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: Daiwa

Price Call: HOLD

Target Price: 5.50

Wilmar reported a 14% rise in its second quarter net profit on Friday on the back of strong margins in its core palm oil businesses.

Daiwa said Wilmar's plantations segment performed well for the quarter, driven partly by stronger production volumes and better average selling prices.

However, Daiwa justified the hold rating on the stock by saying Wilmar's valuations benchmarked on its past five-year averages and versus its peers suggest that the stock is fully valued, even after accounting for the company's strong exposure to emerging markets like China, India and Indonesia.

Downside risks include an economic slowdown and a reimposition of price controls on consumer pack oils in China, as well as poor timing of purchases of oilseeds, Daiwa said.

But value-accretive mergers and acquisitions could boost Wilmar's share price, it noted.

At 10:55 a.m., Wilmar shares were flat at $5.21. The stock has fallen more than 7% so far this year.