MARKET PULSE: Golden Agri, Genting, UOL, BreadTalk (13 Aug 2012)

Stock Name: GoldenAgr
Company Name: GOLDEN AGRI-RESOURCES LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.81

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC

Research House: OCBC

Price Call: BUY

Target Price: 1.66

Stock Name: UOL
Company Name: UOL GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 5.26

Stock Name: BreadTalk
Company Name: BREADTALK GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.51

MARKET PULSE: Golden Agri, Genting, UOL, BreadTalk

13 Aug 2012

KEY IDEA Golden Agri-Resources Ltd: 2Q12 results still in-line Summary: Golden Agri-Resources (GAR) reported its 2Q12 results last Friday, with revenue falling 16.2% YoY and 11.7% QoQ to US$1341.5m, while net profit fell 39.9% YoY and 33.3% QoQ to US$108.1m. But results were still in-line, given that 1H12 revenue met 52% of our full-year forecast, while net profit met 50% of our FY12 estimate. Going forward, GAR believes that the industry outlook remains resilient with robust demand growth for palm oil coming from both emerging and developed countries; it expects to spend US$500m as capex to expand both upstream and downstream operations. As we believe that our conservative assumptions have captured most of the downside risk, we maintain our BUY rating and S$0.81 fair value. (Carey Wong) MORE REPORTS Genting Singapore: BUY with lower S$1.66 fair value Summary: Genting Singapore (GS) posted 2Q12 revenue of S$702.2m, down 3% YoY and 11% QoQ, where overall revenue was affected by marginally lower casino business volume. As a result, reported net profit slipped 31% YoY and 21% QoQ to S$166.7m. For 1H12, revenue slipped 9% to S$1489.2m, meeting 42% of our FY12 forecast, while reported net profit fell 31% to S$378.2m, or 38% of our full-year estimate. As guided, its EBITDA margin was also affected by the start-up costs associated with the West Zone (Marine Life Park is expected to have a soft launch towards the end of 2012). But management believes that the adjusted EBITDA margin of ~45% is the worst it will see. However, in view of the more depressed economic outlook, we pare our DCF-based fair value from S$1.97 to S$1.66; but we maintain our BUY rating. (Carey Wong) UOL Group: 2Q12 earnings broadly in line Summary. UOL's 2Q12 PATMI came in at S$171.7m, down 19% YoY mostly due to lower income from property development and higher marketing expenses. Excluding one-time gains, we estimate core PATMI at S$93.7m - in line with our expectations and 1H12 core PATMI now makes up 49% of our FY12 forecast. HDB has awarded the Bright Hill site to the UOL/ Singapore Land JV, and management believes that ASPs of S$1.3k-S$1.4k are achievable. Looking forward, the group indicated they would favor land-bank in the mid-tier space, away from the mass-market sector which is overcrowded in their view. We like that management has managed to secure more land-bank; UOL's limited exposure to a still healthy mass-market segment, however, points to a lack of catalysts in 2H12. Maintain HOLD with a higher fair value estimate of S$5.26 (30% RNAV disc.), from S$4.80 previously, as we update valuations of listed holdings and for the recent land acquisition. (Eli Lee) BreadTalk Group: Challenging environment ahead Summary: BreadTalk Group's (BTG) 1H12 performance did not disappoint: Its top-line recorded a growth of 24.6% YoY to S$210.9m while its bottom-line increase of 22% YoY to S$4.5m, which formed 50% and 37% of our FY12 estimates. The restaurant segment proved to be a surprise as its Din Tai Fung chain in Singapore and Thailand remained popular amongst consumers, and helped to offset unprofitable performances in its Ramen Play and Carl's Junior (China) business as well as weaker contributions from its bakery and food court segments. BTG also announced a 0.5 S cents interim dividend for the first time in its history. Going forward, we anticipate continued slowdowns in retail sales in both of its key markets of China and Singapore, which may exacerbate raw material costs increases in 2H12. As a result, we leave our FY12/13 projections unchanged but assign a lower multiple of 11x (12x previously) to our blended FY12/13 earnings. Maintain HOLD at a reduced fair value of S$0.51 (S$0.56 previously). (Lim Siyi)

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NEWS HEADLINES - Stocks rose on Friday despite an unexpected decline in China's trade surplus. The S&P 500 Index climbed 0.2% to 1405.87. The Dow rose 0.3% to 13,207.95. - Sinarmas Land reported 2Q12 PATMI of S$34.0m, versus S$2.0m for the year-ago period (restated 2Q11). Revenue rose 41% YoY to S$144.6m. - SC Global posted a 2Q12 net loss of S$21.7m, versus a PATMI of S$46.3m a year ago. Revenue had declined 53% YoY to S$123.1m. - Hong Leong Finance posted a 44% YoY decline in 2Q12 PATMI to S$14.7m. The decline was chiefly due to the topping-up of prudential provision with the growth in the loan book, ahead of income generation from the new loans. - Raffles Education Corporation expects to report a loss for FY12 ended 30 Jun, largely due to a ~S$59.7m provision for the loss on disposal of land use rights and ~S$60m impairment of goodwill arising from previous acquisitions. - Hotel Royal registered a 2Q12 net loss of S$68k, versus a PATMI of S$3.6m a year ago. Revenue had climbed 5.8% YoY to S$13.2m.