SembMar - SembMarine target raised by DMG to $5.30 on new orders

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: DMG

DMG raises SembCorp Marine’s (S51.SG) target to $5.30 from $4.70 and maintains its Neutral rating.



After SembMarine announced an order win from Noble Corp for two premium jackup rigs valued at US$400 million ($525 million) plus options for four more, the house estimates that SembMarine’s total outstanding order book is now around US$5.3 billion, with deliveries stretching up to 2Q 2013.



DMG raises its FY11-12F EPS estimates by 4.0% and 10% respectively to reflect the new jackup orders from Noble and higher margins on repeat orders.

Says its new SOTP target is valued at 19x FY11 P/E and FY12 P/E.



“We maintain Neutral given the limited upside of 6.0% from its last closing price and current valuation is already reflecting an upcycle for the rig building sector. Key upside risks are better-than-expected new order wins and stronger margins on new orders.” Its shares are up 1.8% at $5.08.

SembMar - SembMarine target lifted to $6.08 by DBS Vickers

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: DBS Vickers

DBS Vickers keeps Sembcorp Marine (S51.SG) at Buy and raises the target price to $6.08 from $5.48 to factor in the rig-builder’s latest US$400 million ($525 million) contract win in its valuations.

The house says the new orders from Noble Corp. (NE), which has also awarded options to build four more rigs for another US$800 million, bode well for SembMarine; “this design should strengthen SembMarine’s niche and track record for premium jack-ups operating in a harsh water environment, leading to more contract wins of similar design.”



Expects SembMarine to get more than US$4.5 billion worth of orders next year. Shares are +1.8% at $5.08.

Wilmar - Wilmar target cut to $6.73 from $7.49 by Daiwa

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: Daiwa

Daiwa cuts Wilmar’s (F34.SG) target price to $6.73 from $7.49, based on a lower 14.4x FY11 P/E vs 16.2x FY11 P/E previously, to reflect its concerns over the agribusiness group’s venture into the real estate business.



“We believe investors will see this as a strategic divergence from its core (business), will raise concerns that the company is running out of investment opportunities in its core business, and have investors questioning why Wilmar is being used for this project.”

But keeps its Outperform call as it thinks the surprise 3Q10 operating loss in Wilmar’s oilseed division is a one-off event; “we think that the subsequent quarter’s results will validate our view and cause investors to raise their expectations for the FY11 net profit.”



Shares are down 4.4% at $5.66.

SIA - SIA target raised by Goldman Sachs; More sanguine cargo outlook

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: Golman Sachs

Goldman Sachs downgrades the Asian airline sector to Neutral from Attractive following the sector’s outperformance in 2H 2010.



“Our downgrade is underpinned by three key reasons: (1) slower traffic growth momentum expected; (2) rising unit costs to result in margin pressure; and (3) sector appears fairly valued.”



Says investors should be selective in 2011, prefers Buy-rated Cathay Pacific (0293.HK), Singapore Airlines (C6L.SG), and CEA H- (0670.HK) and A-shares (600115.SH).

It raises SIA’s target price to $20.50 from $19.50, to reflect a more sanguine outlook in cargo traffic on houses recent upgrades on global demand and trade growth.



The house expects air cargo traffic to grow at an average of 5% on-year for 2011E and 2012E vs previous assumptions of about 1% on year growth, “resulting in a 10%-11% average increase in 2011-2012E EPS forecasts for non-Chinese carriers.”



SIA is +1.4% at $15.40.





 

Olam - Ivory Coast situation neutral for Olam: Daiwa

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: Daiwa

Daiwa keeps Olam International (O32.SG) at Buy with a $3.52 target price. Expects the situation in Ivory Coast -- where there is civil unrest after a disputed election -- will have a neutral impact on Olam.



“We expect Olam to generate more cocoa volume sales, but a thinner unit contribution” in 2Q-3Q FY11. Says Olam would theoretically face a price risk from the change in cocoa prices from the time of the cocoa harvest (typically October-December in Ivory Coast) and the time it can reset its hedge via deliverable futures.

However, says “the conditions in Ivory Coast are volatile now, but at this point, we are not changing our FY11 net-profit forecast, as we think the impact of higher cocoa volumes will offset the lower cocoa unit contribution.”



Adds “we believe in Olam’s business model, and forecast an adjusted net-profit CAGR of at least 25% for FY09-15.” Shares are up 1.6% at $3.09.





 

STXPO 100 - STX Pan Ocean cut to Sell from Neutral by Goldman

Stock Name: STXPO 100
Company Name: STX PAN OCEAN CO., LTD.
Research House: Golman Sachs

Goldman Sachs downgrades STX Pan Ocean (GZ9.SG, 028670.SE) to Sell from Neutral as the company is the most leveraged to weak bulk spot rates within the bulk shipping sector.



“Furthermore, we think there is execution risk on diversification from its core bulk shipping business, hampering earnings recovery. Aggressive expansion in fleet also heightens the risk of over-investment.”

The house cuts its Singapore target price to $11.30 from $17.40 and its Korean target to KRW9,600 ($10.93) from KRW15,100, based on 1.35x 2011 EV/FV. It also lowers 2010-2012 EPS estimates to US$0.37 (49 cents), US$0.76 and US$1.43 from US$0.42, US$1.13 and US$1.37 respectively.



Shares flat at $13.22.

Semb Corp - SembCorp target raised to $5.70 from $5.20 by DBS Vickers

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD
Research House: DBS Vickers

DBS Vickers raises SembCorp Industries (U96.SG) target price to $5.70 from $5.20 as the “core utilities and marine divisions are both revving up.”



The house says utilities are poised for more growth next year and beyond: “Apart from the first full year contribution from Cascal, which adds some 6% to utilities earnings, other new drivers include SembGas expansion by 26% (2011-12), and Salalah (Phase one in 3Q11; full completion in 2H12).”

The house adds, the second cogen plant on Jurong Island and the coastal power plant in India will start operations in 2013, noting marine, through SembCorp Marine (S51.SG), “will continue to make waves.”



DBSV raises FY12 order wins projection to $5 billion from $4 billion from FY11’s $4.5 billion.



“This, along with adjusted orderbook recognition schedule given shorter lead times, has raised Marine FY11-12 (earnings forecasts) by about 1%.” The house keeps at Buy.



The shares are flat at $5.01.