| Research House: CIMB | Price Call: BUY | Target Price: 8.37 |
SINGAPORE (Nov 20): CIMB is maintaining its "add" call on UOL with an $8.37 price target.
In a Nov 19 report, analysts Lock Mun Yee and Tan Xuan say they affirm their positive view of the company after their latest meeting with UOL's management.
| Research House: OCBC | Price Call: BUY | Target Price: 7.16 |
| Research House: OCBC | Price Call: BUY | Target Price: 8.50 |
| Research House: OCBC | Price Call: HOLD | Target Price: 0.92 |
| Research House: OCBC | Price Call: HOLD | Target Price: 0.975 |
MARKET PULSE: UOL, Venture, FEHT, United Envirotech |
11 Nov 2013 |
| KEY IDEA UOL Group: Two residential launches ahead in 1H14 Summary: 3Q13 PATMI increased 6% YoY to S$93.5m with higher contributions from ParkRoyal on Pickering and Pan Pacific Serviced Suites Beach Road (which opened in 1Q13 and 2Q13, respectively) and profits from JV companies. We judge these results to be mostly within expectations, and YTD core PATMI, adjusted for one-time items, now cumulates to 70% of our FY13 forecast. UOL is looking to launch both remaining domestic land bank sites (Sengkang West Way and St. Patrick's Garden) as early as 1Q14 after a fairly successful launch at Thomson Three, which is now ~76% sold with ASPs just shy of S$1.4k psf. In addition, the group reports that it has now launched all four blocks of the Esplanade in Tianjin China, achieving a ~90% take-up rate, and its Jalan Conley project in Kuala Lumpur continues to be on target for its launch in 4Q13. Upgrade to BUY on valuation grounds with an unchanged fair value estimate of S$7.16 (20% RNAV disc.). (Eli Lee) MORE REPORTS Venture Corp: Navigating the uncertain environment Summary: Venture Corp's (VMS) 3Q13 revenue fell 3.4% YoY to S$588.5m but PATMI rose 7.7% to S$35.1m. Results were within our expectations, with 9M13 revenue of S$1,706.7m (-4.9%) and PATMI of S$93.1m (-8.4%) constituting 74.2% and 69.1% of our FY13 forecasts, respectively. We are expecting further sequential improvement in its financial performance in 4Q13. While VMS's Printing & Imaging division was its weakest performer on a YoY basis with revenue falling 28%, we believe the situation is stabilising. Meanwhile, management remains focused on growing its market share with existing customers and penetrating new businesses with exciting growth prospects in light of the current uncertain macroeconomic environment. We roll forward our valuations on VMS to 15x FY14F EPS, and derive a higher fair value estimate of S$8.50 (previously S$7.94). Coupled with an attractive prospective dividend yield of 6.4%, we reiterate our BUY rating on VMS. (Wong Teck Ching Andy) Far East Hospitality Trust: 3Q13 results in line Summary: Far East Hospitality Trust (FEHT) announced 3Q13 results that were in line with ours and the street's expectations. 9M13 distribution per stapled security of 4.22 S cents formed 74% of ours and 73% of the street's prior FY13 forecasts. Gross revenue for was S$31.5m or 9.4% lower than management's forecast (based on IPO prospectus and the circular for the acquisition of Rendezvous). RevPAR for the hotels, excluding the Rendezvous property (which was acquired on 1 Aug), was S$167.1, down 2.7% YoY mostly due to price competition in the sector. Net property income was 9.4% below forecast at S$28.5m. Income available for distribution was S$24.2m or 7.4% below forecast. 3Q13 distribution per stapled security was 1.41 S cents or 7.8% lower than forecast. However, we emphasize that the results were within expectations for the market. We maintain our FV of S$0.92 and HOLD rating on FEHT. (Sarah Ong) United Envirotech: 1HFY14 earnings below forecast Summary: United Envirotech Ltd (UEL) reported 2QFY14 revenue of S$52.0m, down 3.6% YoY but up 17.9% QoQ, driven by higher recurring water treatment revenue (+56.6% YoY, +20.1% QoQ) to S$15.5m. While net profit was down 11.7% YoY to S$7.1m, it was up 24.4% QoQ. For 1HFY14, revenue climbed 11.7% to S$96.0m, or 45.9% of our FY14 forecast, while net profit slipped 7.9% to S$12.9m, meeting 28.9% of our full-year estimate, mainly due to higher-than-expected operating and interest expenses. We will be speaking with management shortly for more updates. In the meantime, we place our Hold rating and S$0.975 fair value UNDER REVIEW. (Carey Wong) |
For more information on the above, visit www.ocbcresearch.comfor the detailed report. |
NEWS HEADLINES - US stocks rose on Fri after a stronger-than-expected Oct jobs report, leading to a record close for the Dow and a fifth straight weekly gain for both the Dow and the S&P 500. - The residential resale property market softened in Oct, with prices falling for both private and public homes, according to a report by the Singapore Real Estate Exchange. - Cosco Corporation (Singapore) has secured a letter of intent for two potential contracts, each worth more than US$200m. - LionGold said the group is expecting to report a loss before tax for 1HFY14. - Chasen Holdings will be raising more than S$13m through a renounceable non-underwritten rights issue of up to 112m warrants. - Sapphire Corporation saw its 3Q13 net loss widen to S$52.3m, compared to a S$3.6m loss last year, due mainly to impairment costs of S$46.4m. |
| Research House: OCBC | Price Call: HOLD | Target Price: 0.96 |
| Research House: OCBC | Price Call: SELL | Target Price: 0.95 |
| Research House: OCBC | Price Call: SELL | Target Price: 0.76 |
| Research House: OCBC | Price Call: HOLD | Target Price: 7.16 |
| Research House: OCBC | Price Call: HOLD | Target Price: 3.10 |
| Research House: OCBC | Price Call: HOLD | Target Price: 0.99 |
| Research House: OCBC | Price Call: HOLD | Target Price: 0.92 |
| Research House: OCBC | Price Call: BUY | Target Price: 2.08 |
| Research House: OCBC | Price Call: SELL | Target Price: 0.80 |
| Research House: OCBC | Price Call: HOLD | Target Price: 0.87 |
MARKET PULSE: Biosensors, NOL, Noble, UOL, Wilmar, YZJ, FEHT, CWT, Vard, Yoma, Singapore GDP |
12 Aug 2013 |
| KEY IDEA Biosensors International Group: A quarter to forget Summary: Biosensors International Group (BIG) reported 1QFY14 earnings which were significantly below ours and the street's expectations. Core PATMI plunged 57.3% YoY to US$12.1m on the back of a 11.2% decline in revenue to US$76.7m, forming 10.1% and 20.0% of our original FY14 forecasts, respectively. This was due to another lacklustre quarter of contribution from licensing and royalties revenue and an inventory drawdown in its distributor sales channels in China in anticipation of new stent tenders. Our revised FY14 revenue forecast implies a 10.4% growth and comes in below management's ~15% growth guidance. We also see mounting cost pressures for BIG and slash our FY14 and FY15 core PATMI projections by 34.4% and 29.9%, respectively. Our FCFE-derived fair value estimate falls from S$1.60 to S$0.96. We expect some near-term selling pressure on the stock and downgrade BIG from Buy to HOLD. (Wong Teck Ching Andy) MORE REPORTS Neptune Orient Lines - Lacklustre 2H ahead Summary: With a disappointing set of 2Q13 results, we downgrade Neptune Orient Lines's (NOL) to SELL. Despite the onset of the 3Q13 peak season, freight rates according to the Shanghai Containerised Freight Index remain weak across the board and traditional rate hikes have yet to make up ground lost in 2Q13. In addition, volume demand should remain weak given the tepid market conditions, and supply overhang continues to render industry action moot. With this downward outlook likely to extend into the medium term, we lower our FY13/14 forecasts accordingly and reduce our P/B peg to 0.9x from 1.1x previously. As a result, our fair value estimate falls to S$0.95 (S$1.38 previously). (Lim Siyi) Noble Group Ltd: Downgrade to SELL with S$0.76 FV Summary: Noble Group (Noble) reported a poor set of 1H13 results last Wed, marred by losses in its Agricultural segment in 2Q13, such that reported earnings only met 20% of our full-year forecast. No doubt the second half tends to be seasonally stronger; but we suspect that its Agriculture segment could continue to be a drag on its overall profitability. As such, we see the need to sharply reduce our FY13 earnings forecast by as much as 43% (FY14 by 18%); the group's targeted cost savings will probably have a more meaningful impact in FY14. Even as we roll forward our 10x valuation to blended FY13/FY14F EPS, our fair value will drop sharply from S$1.09 to S$0.76. Downgrade our call from Hold to SELL. (Carey Wong) UOL Group: Boost from fair value gains Summary: UOL reported 2Q13 PATMI of S$431.4m which increased 151% YoY mostly due to fair value gains at Novena Square, United Square and Odeon Towers where valuation cap rates have compressed some 25 to 50 bps. Excluding fair value and other one-time gains, 1H13 attributable profit is an estimated S$164.4m which is broadly in line with our expectations - constituting 45% of OIR's FY13 forecast of S$368.3m - but somewhat below the street's view (41% of FY13 consensus of S$391.8m). For UOL's residential strategy ahead, we see management remaining cautious and more likely to replenish land at the rate of sales or below, and capital deployment is likely to be focused on growing recurring income in investment and hospitality assets. To recap, UOL had made a cash offer of S$2.55 per share to delist PPHG and we understand that the exit offer is now unconditional with a closing date of 13 Aug 2013. Maintain HOLD with an unchanged fair value estimate of S$7.16 (20% RNAV disc.). (Eli Lee) Wilmar: 2H13 outlook still challenging Summary: Wilmar International Limited (WIL) reported 1H13 revenue slipping 4.0% to US$20626.8m, meeting 41.5% of our full-year forecast; net profit climbed 43.1% to US$533.9m, or about 40.1% of our FY13 forecast. WIL declared an interim dividend of S$0.025/share, versus S$0.02 in 1H12. Going forward, WIL notes that the overall environment remains "challenging", but it remains cautiously upbeat that it can continue to see a seasonally stronger second half performance. As 1H13 results were slightly below forecast, we pare our FY13F earnings by 6.7% (FY14F by 3.6%). But as we roll forward our unchanged 12.5x peg to blended FY13/FY14F EPS, our fair value inches up slightly from S$3.25 to S$3.33. In view of the still difficult operating environment and the credit crunch in China, we maintain HOLD and would be buyers at S$3.10 or better. (Carey Wong) Yangzijiang Shipbuilding: Still a steady ship Summary: Yangzijiang Shipbuilding (YZJ) reported a 12% YoY rise in revenue to RMB4.4b and a 8% decrease in net profit to RMB811.7m in 2Q13, such that 1H13 net profit accounted for about half of our full year estimates, within expectations. Gross margin in the shipbuilding related segment dropped from 24.2% in 2Q12 and 25.9% in 1Q13 to 20.6% in 2Q13, while gross margin in the group's investment division remained high. Despite stiff competition in the shipbuilding industry, YZJ secured 27 effective shipbuilding contracts worth about S$1.01b in 1H13, but likely at single digit gross margins. Meanwhile, the group continues to grow its financing business, which we now forecast greater revenue contributions. We increase our FY13/14F earnings by 3-4%, and with the more favorable RMB/SGD exchange rate, our fair value estimate increases from S$0.95 to S$0.99 (based on 8x FY13/14F core earnings). Maintain HOLD. (Low Pei Han) Far East Hospitality Trust: 2Q13 below expectations Summary: 2Q13 results for Far East Hospitality Trust (FEHT) were below our expectations and the street's. Gross revenue was S$29.3m or 7.9% lower than the IPO prospectus forecast, affected by the hotels' performance. Net property income and income available for distribution came in at S$26.9m and S$23.2m, which were 6.8% and 4.1% below the IPO forecasts, respectively. 2Q13 DPS was 1.43 S cents; 1H13 DPS of 2.81 S cents tracked below our expectations, corresponding to 47% of our prior FY13 estimate of 6.0 S cents, which we now lower to 5.7 S cents. We have transitioned to a DDM-based model, from a RNAV model previously. Adjusting our FY13F revenue assumptions downwards, our FV falls to S$0.92 from S$1.01. We maintain a HOLD rating on FEHT and estimate a FY13 yield of 6.2%. (Sarah Ong) CWT Ltd: 2Q13 within expectations Summary: CWT reported a decent set of 2Q13 results that were roughly in-line with our expectations. Revenue jumped 66% YoY to S$1.7b, driven by higher contribution from its newly established Commodity SCM business. However, the group incurred (i) higher administrative expenses (S$43.7m, +17% YoY) from management and restructuring costs, and (ii) higher financing costs (S$8.5m, +8% YoY) due to higher borrowing and trade volume. The declines were partially offset by improved contribution from its joint-ventures and tax saving, resulting in net profit easing 6% YoY to S$18.1m for 2Q13. For 1H13, revenue and net profit formed 50% and 46% of our FY13F estimates respectively. We will speak to management to obtain more colour. In the meantime, we keep our BUY rating and S$2.08 fair value estimate unchanged. (Chia Jiunyang) VARD Holdings: Secures USD1.1b contract Summary: Vard Holdings Limited has secured contracts for the design and construction of four Pipe Lay Support Vessels (PLSVs), worth about USD1.1b (NOK 6.5b). The contracts were from joint ventures of DOF Subsea and Technip. Two of the PLSVs will be built in Romania in 2Q-3Q16, while the remaining two will be delivered from Brazil in 4Q16-2Q17. We are in the process of adjusting our models. In the meanwhile, we put our Sell rating and S$0.80 fair value UNDER REVIEW. (Chia Jiunyang) |
| Yoma Strategic Holdings: JV successful in Mandalay airport tender Summary: Yoma reported that it has a 5% stake in a consortium, with Mitsubishi Corp. and JALUX Inc., that has successfully tendered for the upgrade and operation of the Mandalay International Airport. The consortium is expected to be awarded the tender upon negotiation, finalization and agreement of the final contract with relevant authorities. While this is a positive development, we see the financial impact on Yoma to be likely capped given that it has only a 5% stake and that the initial equity contribution by all the parties are estimated at around US$3.38m. Yoma also noted that the investment is not expected to have any material financial impact on the consolidated net tangible assets and earnings per share for the current year ending Mar 2014. Maintain HOLD with an unchanged fair value estimate of S$0.87. (Eli Lee) Singapore Economy: 2013 GDP growth forecast upgraded to 2.5-3.5% Summary: According to the MTI, the Singapore economy grew by 3.8% YoY in 2Q13, better than the street's expectations of 3.5% growth, and also better than the 0.2% growth seen in 1Q13. On a seasonally adjusted, annualised basis, the economy expanded by 15.5% QoQ, and was significantly higher than the 1.7% expansion in 1Q13. This was mainly driven by manufacturing, which grew by 32.1% QoQ, reversing the 12.1% contraction in 1Q13, largely due to higher output in the biomedical manufacturing and electronics clusters. Construction grew by 11.2%, compared to 1Q13's 10.3% growth. Finally, services expanded by 11.5% after 1Q13's 7.8% rise, driven mainly by the wholesale & retail trade and the transportation & storage sectors. As global macroeconomic conditions are expected to pick up in 2H13, the MTI has upgraded Singapore's 2013 GDP growth forecast from 1.0-3.0% to 2.5-3.5%. (Low Pei Han) For more information on the above, visit www.ocbcresearch.comfor the detailed report. |
NEWS HEADLINES - US stock indexes declined on Fri, with the Dow Jones Industrial Average halting its longest weekly winning streak since Aug of last year. - Singapore-Listed companies have posted a lower aggregate 2Q13 net profit of S$7.04b, down by 2.8% YoY. - Raw material prices won support last week from upbeat Chinese economic data, while cocoa futures hit 11-month high points on tight supply fears, analysts said. |
| Research House: OCBC | Price Call: BUY | Target Price: 0.57 |
| Research House: OCBC | Price Call: HOLD | Target Price: 7.16 |
| Research House: OCBC | Price Call: BUY | Target Price: 0.595 |
| Research House: OCBC | Price Call: BUY | Target Price: 1.60 |
MARKET PULSE: ECS, UOL, Midas, Biosensors |
13 May 2013 |
| KEY IDEA ECS Holdings: Double-digit growth delivered Summary: ECS Holdings (ECS) reported a positive set of 1Q13 results which exceeded our expectations. Estimated core PATMI jumped 28.6% YoY to S$8.5m on the back of a 20.9% YoY increase in revenue to S$1,090.3m. The group managed to record healthy YoY revenue and EBIT growth for all of its core segments. However, its gross margin slipped 0.4ppt to 3.7% in 1Q13 due largely to a change in product mix. We lift our FY13 and FY14 revenue projections by 8.9% and 10.6%, respectively. But as we also lower our margin assumptions slightly, our FY13 and FY14 core PATMI estimates are raised by a smaller magnitude of 4.2% each. Correspondingly, our fair value estimate increases from S$0.53 to S$0.57, now pegged to 6x FY13F EPS (previously 5.8x). As ECS is trading at an attractive 5.0x and 0.52x FY13F PER and P/NTA, respectively, we upgrade the stock from Hold to BUY. (Wong Teck Ching Andy) MORE REPORTS UOL Group: Proposed delisting of Pan Pacific Hotels Summary: UOL's 1Q13 PATMI decreased 15% YoY to S$71.7m mostly due to a weak contribution from its hotel segment. 1Q earnings now make up 19% of our full-year forecast, which we judge to be generally within expectations and is tracking marginally below due to lumpy progress recognition at development projects. In addition, the group has made a cash offer of S$2.55 per share (9% premium over last transacted price) to delist PPHG (Pan Pacific Hotels Group), conditional on the shareholder approval. We see this as a sensible move which would consolidate the group's hotel assets at a fairly reasonable price. That said, from our discussions with management, it appears unlikely that material operating changes, i.e., a major re-structuring or REIT listing, are in store for PPHG assets. Maintain HOLD with a higher fair value estimate of S$7.16 (20% RNAV disc.), versus S$6.01 previously, as we work into our valuation model higher prices of listed holdings and the Sengkang acquisition. (Eli Lee) Midas Holdings: Expects net loss in 1Q13 Summary: Midas Holdings (Midas) has issued a negative profit guidance prior to its upcoming 1Q13 results release, saying that it expects to report an unaudited net loss. This is mainly due to lower revenue and gross profit margin given the change in product mix and weaker utilisation rates, as well as higher operating expenses and finance costs and a share of loss from its associated company, Nanjing SR Puzhen Rail Transport (NPRT). This profit guidance comes as no surprise to us as we had forecasted Midas to record a net loss of CNY3.2m in 1Q13. We still expect Midas to stage a recovery in 2H13, but the strength of this recovery will be dependent on the developments in China's high-speed railway sector. Midas will report its 1Q13 results on 14 May after trading hours, while an analyst conference call has been scheduled the day after. We will provide more updates then. For now, we have a BUY rating and S$0.595 fair value estimate on the stock. (Wong Teck Ching Andy) Biosensors International Group: Proposed acquisition of assets from Spectrum Dynamics Summary: Biosensors International Group (BIG) announced this morning that it has entered into an agreement to acquire substantially all the assets of Spectrum Dynamics (SD), which is a privately held company. SD is a medical imaging and clinical applications company involved in the designing, developing, manufacturing and distribution of medical imaging systems and technology in multiple fields. The initial deal consideration is US$51.1m (book value of SD's assets valued at ~US$7.3m as at 31 Mar 2013), and will be funded by internal resources. Subsequent performance payments of US$4m and US$15m may be paid to SD if certain performance benchmarks are met in 2014 and 2016, respectively. We are positive on this move as it allows BIG to diversify its product offerings and revenue stream. But as the acquisition is not expected to have a material impact on the EPS and NTA of BIG in FY14, we leave our forecasts unchanged for now. Maintain BUY and S$1.60 fair value estimate on BIG. (Wong Teck Ching Andy) |
| For more information on the above, visit www.ocbcresearch.comfor the detailed report. |
NEWS HEADLINES - Two shareholders in See Hup Seng have called for an EGM to remove the managing director from the board and return the founder and ex-chairman of the company to the boardroom. - The combined profits of companies listed on the SGX trended lower in 1Q13. As of Friday, the 206 companies with 1Q earnings reported a combined profit of about S$6.48b, down 8.4% YoY. - China's new local-currency loans exceeded estimates last month while money supply expanded at a faster pace, a sign policy makers are maintaining credit support for the economy after 1Q growth unexpectedly slowed. - Italian Prime Minister Enrico Letta warned that the future of the government was at risk following a furious row over Silvio Berlusconi's attacks on magistrates in a rally at the weekend. - A dual-track system, including survey-based lending rates along with transaction-linked indices, is likely to replace scandal-hit LIBOR as soon as next year, the Financial Times reported. |
| Research House: OCBC | Price Call: BUY | Target Price: 9.22 |
| Research House: OCBC | Price Call: BUY | Target Price: 0.29 |
| Research House: OCBC | Price Call: HOLD | Target Price: 1.28 |
| Research House: OCBC | Price Call: HOLD | Target Price: 5.48 |
| Research House: OCBC | Price Call: BUY | Target Price: 13.10 |
| Research House: OCBC | Price Call: HOLD | Target Price: 3.06 |
| Research House: OCBC | Price Call: HOLD | Target Price: 0.21 |
MARKET PULSE: Venture, GPH, Noble, UOL, City Dev, Wilmar, Valuetronics |
9 Nov 2012 |
| KEY IDEA Venture Corp: Look beyond the short-term Venture Corp (VMS) reported a 8.1% YoY decline in its 3Q12 PATMI to S$32.6m despite revenue increasing 4.3% to S$608.9m. Topline was within our expectations, although bottomline missed due to weaker-than-expected margins. For 9M12, revenue of S$1,795.0m (-0.3%) and PATMI of S$101.7m (-14.2%) formed 72.7% and 67.7% of our FY12 estimates, respectively. The general sentiment among VMS's customers remains weak in the near-term, but we believe that its product pipeline from both new and existing customers would yield more meaningful contribution in FY13. While we pare our FY12 revenue and PATMI estimates by 1.6% and 9.1%, respectively, we leave our FY13 forecasts intact. We opine that investors should position themselves for the expected recovery in VMS's business in FY13, and hence roll forward our valuations to 15x FY13F EPS. This raises our fair value estimate from S$8.72 to S$9.22. Coupled with an attractive FY12F dividend yield of 7.1%, we maintain our BUY rating. (Wong Teck Ching Andy) MORE REPORTS Global Premium Hotels: Maintain FV of S$0.29 Global Premium Hotels (GPH) registered 3Q12 results that were below our expectations. 3Q12 revenue increased by 8.1% YoY to S$14.9m. EBITDA margin fell 6.6 ppt to 59.8% (excluding one-off expenses of S$0.5m for 3Q12). 9M12 EPS of 1.34 S cents equaled 72% of our prior FY12F estimate of 1.87 S cents, which we now lower to 1.75 S cents. GPH has begun construction of its new mid-tier Parc Sovereign Hotel located at Tyrwhitt Road in Aug 2012. An independent valuer has estimated a gross development value S$150m, implying a potential fair value gain of S$42m. We have incorporated the Tyrwhitt site development into our RNAV model. We maintain our fair value of S$0.29 (using a 10% discount to RNAV) and a BUY rating. GPH intends to distribute at least 80% of net profit after tax for FY12; we estimate an attractive FY12F dividend yield of 5.8%. (Sarah Ong) Noble Group Ltd: Downgrade to HOLD Noble Group (Noble) reported 3Q12 revenue of US$22.7b, though up 9% YoY, it was down 6% QoQ. Net profit came in at US$75.2m; while it had reversed a net loss of US$17.5m a year ago, it missed the street's US$155m forecast. For 9M12, revenue grew 15% to US$69.8b, meeting 75% of our FY12 forecast, while net profit climbed 17% to US$380.1m, or 68% of our full-year number. Estimated core earnings (without disposal gains) of US$282.9m formed just 50% of our forecast. We expect Noble to see a negative knee-jerk reaction to its lower-than-expected earnings (we have also cut our FY12 and FY13 forecasts to incorporate still-weak margins). We also downgrade our call to HOLD, given that the stock has risen some 21% since our upgrade on 14 Aug. But we believe Noble should start looking towards a reasonable recovery next year; and we have moved our valuation to FY13 with a higher 12x (versus 10.5x blended previously) peg, which keeps our fair value unchanged at S$1.28. (Carey Wong) UOL Group: 3Q12 earnings - no surprises UOL reported 3Q12 PATMI of S$87.8m, down 13% YoY mostly due to lower development profits and renovation works at Pan Pacific Singapore. We judge this set of results to be mostly within expectations and, excluding fair value and other gains, adjusted 9M12 PATMI cumulates to S$258.2m which makes up 74% of our annual FY12 forecast. This being so, we see the market likely taking a neutral view on 3Q numbers. We expect new residential launches at Bright Hill and St. Patrick Rd in 1H13, with Bright Hill likely to come first around Mar-Apr 2013. Management continues to execute well, and upcoming launches would be key catalysts for the share price over the mid-term. Maintain HOLD with a higher fair value estimate of S$5.48 (30% RNAV disc.), from S$5.26 previously mostly due to updated valuations of listed holdings. (Eli Lee) City Developments Limited: Top bid for Sengkang EC site City Developments Limited (CDL) put in the top bid of S$135m (S$296 psf) for an EC site at Sengkang West Way/Fernvale Link. The tender attracted a total of six bidders and CDL's bid was only 0.1% above the second highest bid. This site, with a total GFA of 455k sf, is located near Layar LRT station, Fernvale Point and the upcoming Seletar Mall, and the development is expected to consist ~380 units. We estimate breakeven and selling ASPs at S$S$600 psf and S$720 psf, respectively; the latter generally in line with price levels at comparable projects, such as Twin Waterfalls and Riverparc Residence, over the first three quarters of FY13. We expect this acquisition to accrete 1.5 S-cents to RNAV but leave our fair value estimate unchanged at S$13.10 (15% RNAV disc.) pending approval of this acquisition. Maintain BUY. (Eli Lee) Wilmar: Stronger 3Q12 showing Wilmar International Limited (WIL) reported a stronger set of 3Q12 results, with reported net profit jumping 26% YoY to US$405.8m, even though revenue slipped 6% to US$12.3b, aided by better performance at most key segments (except for Oilseeds & Grains and Plantations & Palm Oil Mills). Excluding non-operating items, net profit came in around US$388.0m, from US$451.4m a year ago. 9M12 revenue inched up 2% to US$33.8b, meeting 73% of our full-year estimate, while reported net profit fell 29% to US$778.7m; core net profit fell 41% to US$766.0m, but still met 80% of our FY12 estimate. While management maintains its positive long-term outlook, we note that near-term challenges remain. We will be speaking with management later to get further updates. Until then, we place our Hold rating and S$3.06 fair value under review.(Carey Wong) Valuetronics Holdings: 2QFY13 core earnings above expectations Valuetronics Holdings Limited (VHL) reported its 2QFY13 results this morning. Revenue from continued operations was flat YoY at HK$595.5m (+0.2%), or 11.6% below our forecast. Reported PATMI plunged -88.5% YoY to HK$3.3m as VHL incurred hefty termination expenditure and provision for impairment on property, plant and equipment (PPE) from its Licensing division (announced its decision to cease operations during its 1QFY13 announcement). Adjusting for this and other exceptional items, we estimate core PATMI of HK$31.5m, a 34.1% YoY increase, and this exceeded our HK$26.2m projection. With regards to its Licensing division, VHL said that it does not expect to incur further provision for termination expenditure and impairment losses for PPE. Looking ahead, challenging conditions in the manufacturing industry such as rising labour costs are expeced to continue and we expect this to place some pressure on VHL's margins. We will provide more details after the analyst briefing next week. We maintain our HOLD rating but place our S$0.21 fair value estimate under review.(Wong Teck Ching Andy) |
For more information on the above, visit www.ocbcresearch.comfor the detailed report. |
NEWS HEADLINES - US stocks extended losses for a second day despite upbeat data showing that jobless claims fell last week, as investors fretted about the looming fiscal cliff and Europe's troubles. The Dow fell 0.9% to 12,811.32, while the S&P 500 Index slid 1.2% to 1,377.51 and the Nasdaq 1.4% lower at 2,895.58. - The ECB held its main interest rate at 0.75%. The euro zone's economy is weak and not improving, ECB president Mario Draghi warned. - Sim Lian Group's 1Q13 PATMI slumped 64% YoY to S$37.4m as revenue fell 28% to S$190m, mainly due to lower revenue contribution from two projects that obtained their TOP a year earlier. - GP Batteries' 2Q13 PATMI fell 88% YoY to S$0.3m as revenue slid 1% to S$200m, mainly due to lower sales in Europe. Its bottom line was also hurt by losses at associates and foreign exchange losses due to a weaker US$. - Food Junction Holdings' 3Q12 net loss attributable to shareholders widened to S$5.4m, from S$0.8m a year ago, as revenue declined 0.6% to S$13.9m, mainly due to permanent and temporary closures of some food courts. |
| Research House: OCBC | Price Call: BUY | Target Price: 0.81 |
| Research House: OCBC | Price Call: BUY | Target Price: 1.66 |
| Research House: OCBC | Price Call: HOLD | Target Price: 5.26 |
| 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) |
For more information on the above, visit www.ocbcresearch.comfor the detailed report. |
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. |
| Research House: OCBC | Price Call: BUY | Target Price: 4.80 |
OCBC Investment Research has upgraded property developer UOL Group to buy from hold and raised its target price to $4.80 from $4.77, citing higher average selling prices for one of its projects in Singapore.
By 9:11 a.m., shares of UOL were 0.5% lower at $4.47 but have risen nearly 12% since the start of the year.
UOL’s first quarter net profit fell 63% to $84 million due to lower revenue from property development and a drop in its share of profits from associated companies.
This was in line with OCBC’s expectations, with the broker saying UOL will continue to see revenue recognition from several Singapore properties.
“Given limited land bank, we believe UOL to be relatively sheltered from uncertainties in the domestic residential space ahead,” OCBC said in a report.
| Research House: CIMB | Price Call: BUY | Target Price: 5.31 |
CIMB Research has raised its target price for Singapore’s property developer UOL Group to S$5.31 from S$4.90 and kept its outperform
rating.
By 9:18 a.m., shares of UOL were 1.3% lower at $4.73. The stock has risen 18.3% since the start of the year.
UOL posted on Friday a 12% fall in full-year net profit to $664 million, mainly due to higher taxes and lower fair value gains, which was in line with CIMB’s estimates.
CIMB said it expected UOL’s residential and retail development Lion City to see strong sales when it was launched in the second quarter.
Growth in retail rents would also help offset lower office rents as 40% of UOL’s retail leases would be due this year, the brokerage added.
| Research House: OCBC | Price Call: BUY | Target Price: 5.17 |
| Research House: Nomura | Price Call: BUY | Target Price: 7.17 |
| Research House: OCBC | Price Call: BUY | Target Price: 5.57 |
| Research House: OCBC | Price Call: BUY | Target Price: 1.04 |
Summary: The latest DC rates revisions showed largest increases in Industrial/Warehousing (Group D - 31%) and Commercial (Group A - 22%). Overall, we believe the market would be neutral to these revisions as these were in line with the broad 1H11 uptrend in industrial and commercial rentals and capital values. We judge that the incremental impact of these rates increases in itself would be relatively low for developers. But, coupled with current macro uncertainties and expected inflection points in residential prices and office rentals ahead, this could push developers further towards a cautious stance. Going forward, we expect the rate of DC increases for the commercial and residential sector to decelerate as selling prices, rentals and capital values soften with macro headwinds. We prefer UOL due to its limited residential exposure and the potential to pick up land-bank as the acquisition environment cools down further (BUY with a fair value estimate of S$5.57). (Eli Lee))
ECS Holdings: Likely limited impact from HP PSG spinoff
Summary: ECS Holdings (ECS) has released an announcement in response to HP's decision to spinoff or sell its Personal Systems Group (PSG) business. This includes its PCs, notebooks and webOS operating system and devices. Given the uncertainty generated for HP's suppliers and consumers, ECS's management highlighted to us during a teleconference that HP has provided incentives for the group to entice it to continue its focus on their products. These include increased advertising and promotion and faster reimbursement of rebates. We believe that this would help to improve the working capital of ECS. Moreover ECS has also returned all the HP tablets (TouchPad) and smartphones and received a full refund. Overall, ECS opines that the impact of a spinoff, should it materialise, is likely to mitigated as it is expected to continue to act as a regional distributor for PSG. This business contributed ~18% of ECS's total purchases (contribution has been declining) and ~8% of its total net profits. Moreover the group has also been diversifying by forging strategic agreements with other key vendors such as Dell and Lenovo. We believe that even if HP sells the PSG business to a competitor, the distributorship of the products could still continue given ECS's established relationships with most of the key vendors. Hence we maintain our BUY rating and fair value estimate of S$1.04. (Wong Teck Ching Andy)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
| Research House: DBS Vickers | Price Call: BUY | Target Price: 5.27 |
| Research House: BofA Merrill Lynch | Price Call: BUY | Target Price: 6.20 |
| Research House: IIFL | Price Call: BUY | Target Price: 5.78 |
| Research House: OCBC | Price Call: BUY | Target Price: 5.57 |
Nomura Research in a Feb 23 research report says: "UOL announced its FY2010 results after the market closed on Feb 22. Overall, the results were broadly in line with our as well as consensus expectation, with full-year core PBT meeting 97% and 99% of the respective estimates.
OCBC Investment Research in a Jan 19 research report says: "UOL announced that it has successfully tendered for the Lion City Hotel Site and the adjoining Hollywood Theatre Site for $313 million. We estimate that this project has a net present value of $62 million or $0.08 per share.
Nomura on a Jan 3 research report says: "On Dec 22, UOL announced the acquisition of UOB's 9.7% stake in UIC at $2.40 per share. The deal is a NAV-accretive one, which gives UOL a bigger share of UIC Building's redevelopment's potential gain and greater control over MCH.
