MARKET PULSE: Petra Foods, Far East Hospitality (13 Dec 2012)

Stock Name: Petra
Company Name: PETRA FOODS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 3.57

MARKET PULSE: Petra Foods, Far East Hospitality

13 Dec 2012

KEY IDEA Petra Foods: Pure EM Asia consumer player Petra Foods is now a leaner company focused on emerging Asia consumer demand after surprising the market by divesting its Cocoa Ingredients division to Barry Callebaut for US$950m. With an essentially debt-free balance sheet and US$300m war-chest, Petra will look to continue its dominance in its key markets of Indonesia and the Philippines. We like this development and raise our projections according to factor in a higher growth rate in improved margins from a pure Branded Consumer operation. As a result, our valuation increases to S$3.57 (maintaining our 25x 12-month forward PE). Maintain BUY. (Lim Siyi) MORE REPORTS Far East Hospitality Trust: Proposed acquisition of Rendezvous Grand Hotel In Nov, Far East Hospitality Trust (Far East H-Trust) and Astor Properties Pte. Ltd., a member of the Far East Organization group (the sponsor) entered into a non-binding memorandum of understanding with The Straits Trading Company Limited to acquire Rendezvous Grand Hotel Singapore and its retail component Rendezvous Gallery Singapore. Far East H-Trust also entered into a separate non-binding MOU with the sponsor to grant a master lease of the hotel component to the Sponsor as master lessee under a master lease agreement. We have not incorporated the proposed transactions into our model since no definitive agreements have been executed. Rolling forward our model to FY13F, and using more conservative capitalization rates given a more cautious outlook for tourism in 1H13, we reduce our RNAV-based fair value from S$1.08 to S$1.02, and downgrade FEHT from Buy to a HOLD. (Sarah Ong)

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NEWS HEADLINES - US stocks were little changed on Wed after Fed chairman Ben Bernanke warned that it could not shield the economy from the impact of the fiscal cliff, despite taking further measures to stimulate spending and investment. Both the Dow and the S&P 500 Index ended flat, at 13,245.45 and 1,428.48, respectively, while the Nasdaq finished 0.3% higher at 3,013.81. - Medi-Flex Ltd reported 1Q13 PATMI of MYR5.2m, or 3.8 times the MYR1.4m it earned a year ago, supported by a 7% increase in revenue to MYR43.6m. Its gross profit margin doubled to 12%, due to higher sales volume, improved product mix, favourable raw material prices and improved production efficiency. - Datapulse Technology's 1Q13 PATMI rose 31% YoY to S$4.1m, despite an 8% drop in revenue to S$21.5m, as operating expenses fell by even more. Sales were hurt by weaker demand for media storage products and services. - Hong Fok Corp has established a S$300m medium term note programme that will allow it to sell debt of various maturities in various currencies to raise funds for general corporate purposes such as refinancing existing debt and financing capital spending.