MARKET PULSE: Sakari Resources, Goodpack, Viz Branz, Micro-Mechanics (28 Aug 2012)

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.85

Stock Name: Micro-Mech
Company Name: MICRO-MECHANICS (HOLDINGS) LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.325

MARKET PULSE: Sakari Resources, Goodpack, Viz Branz, Micro-Mechanics

28 Aug 2012

KEY IDEA Sakari Resources: Cash offer at S$1.90/share Sakari Resources Limited (SRL) announced yesterday that PTT Mining Limited (PTTM) - a wholly owned subsidiary of PTT International - has made a mandatory conditional cash offer at S$1.90/share for all the shares in SRL that it does not already own. As the offer is also some 31% above our previous DCF-based fair value of S$1.45, we think that shareholders should ACCEPT THE OFFER, especially in light of the still uncertain longer-term outlook for global coal prices. In addition, we do not expect a competing bid as PTT group already owns such a large stake. (Carey Wong) MORE REPORTS Goodpack Limited: FY12 results in line Goodpack's FY12 results saw an overall 11.7% YoY growth in revenue to US$177.2m on the back of higher demand from the Synthetic Rubber segment while PATMI climbed higher by 4.6% YoY to US$45.2m. Its results were in line with our projections, coming in within 2.5% and 2.4% of our top and bottom-line forecasts respectively. To round off a stellar year, management declared a final dividend of 2 S cents and a special cash dividend of 3 S cents (FY11: final and special cash dividend of 2 S cents and 1 S cent respectively). Entering FY13, we forecast a 10% increase in revenue on the back of sustained growth in the Synthetic Rubber segment as well as increasing penetration in the automotive space. While margin pressures from higher logistic costs and IBC leasing charges will remain, we still anticipate overall bottom-line growth for the company. Rolling our projections forward to FY13/14, our fair value estimate rises from S$1.70 to S$1.85. Maintain HOLD. (Lim Siyi) Viz Branz Limited: Upgrade to BUY Viz Branz (VB) reported a strong set of FY12 results, with revenue gaining 4.3% YoY to S$172.7m following increases in demand across all business segments while declines in raw material costs and operating expenses over the course of the year aided significant margin improvements, which saw PATMI climbing higher by 47.6% YoY to S$17m. Management has yet to declare a final dividend but dividends declared thus far totaled 3.3 S cents, which is already greater than last year's 2.5 S cents. With demand from China and raw material prices likely to remain stable in the coming year, we leave our gross profit margin projections unchanged but raise our operating margin forecasts slightly to account for the continued easing of VB's cost structure. Upgrade to BUY at a revised fair value estimate of S$0.74. (Lim Siyi) Micro-Mechanics: 4QFY12 results exceeds expectations Micro-Mechanics Holdings (MMH) reported 4QFY12 results which beat our expectations. Revenue declined 6.8% YoY to S$10.3m, but was 8.1% higher than our forecast. Net profit fell marginally by 0.4% to S$1.4m, but compared favourably to our S$1.1m projection due largely to better-than-estimated revenue and gross margin. Sequentially, revenue and net profit showed encouraging signs with increases of 10.6% and 55.5%, respectively. For FY12, topline fell 14.4% to S$38.8m, while bottomline slumped 38.2% to S$4.2m. This was 2.8% and 7.3% above our full-year estimates, respectively. A final dividend of 2 S cents/share was declared, bringing total FY12 dividends to 3 S cents/share. This was similar to FY11 and our forecast, and translates into a yield of 7.7%. Looking ahead, MMH highlighted the lack of visibility in the near-term, while cost pressures are also apparent given the increase in minimum wages in several of its operating locations in Asia. We will provide more details after the analyst briefing. Meanwhile, our Hold rating and S$0.325 fair value estimate is under review. (Wong Teck Ching Andy)

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

NEWS HEADLINES - U.S. blue-chips closed lower on Monday in a quiet session. The Dow fell 0.3% to 13,124.67. The S&P 500 Index closed down 0.1% to 1,410.44. - Far East H-Trust closed two cents up at 95 S cents in its trading debut yesterday. - Koon Holdings' PATMI for 1H12 dropped to S$546k versus S$6.32m a year ago despite a 178% increase in revenue to S$99.3m. - Loyz Energy posted a FY12 net loss of S$5.1m versus a PATMI of S$905k for FY11. Revenue declined 30% to S$16.5m. - Noel Gifts International registered FY12 net profit of S$3.20m, down 12.7%. Revenue had declined 1.3% to S$25.7m. - Raffles Education is proposing to undertake a renounceable non-underwritten rights issue at S$0.14 each, on the basis of one rights share for every five existing shares held.