THE EDGE SUMMARY OF BROKER'S CALLS - SEP 10 - SEP 16, 2007
China Sunsine Chemical Holdings (Sept 6: 35.5 cents) TP: 50 cents
OUTPERFORM (initiating coverage). China Sunsine Chemical Holdings is involved in the production of rubber chemicals, essential for rubber production. Capacity of its key product, rubber accelerators, is slated to expand 56% to 50,000 tonnes a year by end-2009, making the company the world's largest rubber accelerator producer. Sales and profits are set to grow 28% and 24% of CAGR for FY2007-2009. Growth should be fuelled by the 56% expansion in rubber accelerator capacity and contributions from new rubber chemical products. The projected three-year EPS CAGR for FY2007-2009 is lower at 13%, owing to share capital dilution post-IPO. The target price of 50 cents, based on 12x CY2008 earnings, is in line with international peers Lanxess and Chemtura. - CIMB-GK Research (Sept 5)
Macquarie MEAG Prime REIT (Sept 6: $1.23) TP: $1.32
MAINTAIN BUY. Revenue growths were tepid at 5.5% y-o-y and 1.1% q-o-q to $23.6 million. Net property income did better sequentially, improving 4%. This was due to lower expenses related to lease renewal commission and depreciation. DPU for 2Q2007 was 1.5 cents. MMP remains one of the few real estate investment trusts (REITs) with a low P/B ratio. This low valuation means it is likely to be more resilient in market uncertainty. Since our last report (April 2007), MMP's share price has corrected about 2%. It is trading at just under 1xP/B and implies that the market has not factored in growth. With a DPU yield of 5% and a capital value upside of 8%, total return of over 13% is possible with little downside risk. Fair value of $1.32. - OCBC Investment Research (Sept 5)
Singapore Food Industries (Sept 6: 84.5 cents) TP: 75 cents
HOLD (initiating coverage). SFI is an integrated food company headquartered in Singapore. The group is aggressively exploring more opportunities in the UK/ Europe geographical region - its core market, accounting for 58% of sales. SFI's share price seems to outperform relative to its financial performance despite being profitable every year since listing and consistently achieving ROE of at least 20%. Based on it historical average, we believe the stock should trade at a fair value of 75 cents. As it is currently trading at a premium of 10.7% and given the mature domestic outlook, coupled with bad tidings on the Australian and Chinese market, we are initiating coverage with a 'hold' recommendation. - SIAS Research (Sept 4)
CMZ Holdings (Sept 6: 26.5 cents) TP: 37 cents
BUY (initiating coverage). The company produces and sells zippers to the mid0ragne to high end of the garment industry. We like CMZ for three primary reasons: (a) no replacement product for zippers; (b) focus on the mid-range to high-end market; and (c) for the last two consecutive years, its Chima brand was named one of China's top 10 zipper brands. It is one of the designated suppliers to international brands such as Calvin Klein. The 12-month price target of 37 cents represents an upside potential of 54%. Our target price is based on a target multiple of 10x FY12/2008 EPS, which we feel is reasonable, in view of its robust earnings growth outlook. Management targets a 20% dividend policy for FY12/2007. - SBI ES-Capital Securities (Sept 3)
Midas Holdings (Sept 6: $1.37) TP: $1.84
MAINTAIN BUY. Midas announced that the proposed joint venture with Northeast Light Alloy Co (Nela) has not received regulatory approval. Thus, we have lowered our FY2008 earnings by 9.5% to $64.7 million. We remain positive on the group, however, as its core business and the Nanjing Puzhen JV should still help drive healthy growth. We have adjusted our target price of $1.84, based on 24x FY2008 earnings. Our target multiple has been lowered from 27x to 24x to reflect the slower earnings growth from the loss of the Nela JV. However, with earnings CAGR still robust at 50% from FY2006 to FY2009, driven by the existing core business and the Nanjing Puzhen JV, PEG at 24x FY2008 earnings remains undemanding at less than 0.5x. - DBS Vickers Securities (Sept 5)
Sinwa (Sept 6: 69.5 cents) TP: 82 cents
MAINTAIN BUY.For 1H2007, Sinwa's revenue rose 12.8% to $59.4 million while earnings jumped 41.5% to $5 million, mainly driven by the buoyant offshore marine activities in Australia and Singapore. Gross and net margins improved 0.5 percentage point and 1.7 percentage points respectively. EPS increased 23.2% from 1.85 cents to 2.28 cents. The issuance of 33 million new shares in February helped increase total equity as well as cash and equivalents. The 1H2007 results are in line with our earlier forecast and we maintain our target price of 82 cents a share. Our projected valuation represents a 29% potential upside. At this level, it will be valued at 16.3x FY2007 and 9.2x FY2008 earnings. - SIAS Research (Sept 5)
Fujian Zhenyun Plastics Ind Co (Sept 6: 63 cents) TP: 92 cents
BUY. FJZY is a leading plastic pipe maker in China. We view FJZY as a key participant in China's infrastructural boom and we like its market positioning in the lucrative gas sector as well as export growth potential. While is PER products may face margin pressure from higher oil prices, the cost increases have so far been absorbed by its customers. Forward PERs of 3.7x in FY2007 and 3.5x in FY2008 are grossly undervalued vis-a-vis two-year net profit CAGR of 22.5%. We have ascribed FJZY a FY2007 PER of 7.8x as compared with its closest peer Sinopipe, which is trading at 5.4x PER and applied a 20% "S-share" discount on the stock. This translates into a target price of 92 cents with a 80% upside return. The stock also offers an attractive 4.8% dividend yield. - Kelive Research (Sept 6)
SembCorp Marine (Sept 6: $4.38) TP: $4.71
OUTPERFORM (initiating coverage). We expect rig order momentum to carry through to 2009E, with SMM winning new rig orders aggregating $8.5 billion in 2007 to 2009E, representing 28 jack-ups or 10 semi-submersible rigs, in view of the cycle continuing for the next two year, given the current market conditions. We also expect gross margins to improve from 8.2% in FY2006 to 10.3% in FY2009E. We value SMM at $4.71, based on a target FY2008 PER of 20x, plus the value of its stake in Cosco Corp (S). With a 2007E dividend yield of over 3% and an earnings CAGR of 21% in FY2006 to FY2009, we believe this is a reasonable representation of the value of the company in relation to its Singapore large-cap peers and other offshore and marine companies. - Credit Suisse (Sept 3)
Time Watch Investments (Sept 6: 27.5 cents) TP: 52.5 cents
MAINTAIN BUY. Revenue increased 19% to 855.9 million renminbi ($173 million) in FY2007 y-o-y, thanks to 11 months' contribution form the original equipment manufacturer segment and robust retail sales performance. Gross margins swelled 5.3 percentage points on improved economies of scale and successful cost-cutting measure. Reported net profit was 73.4 million renminbi, up from a new loss of 48.3 million renminbi in FY2006. Net of goodwill written off in FY20056 and revaluation gain on property in FY2007, net profit will have grown 29% y-o-y. A dividend payout of 0.6 cents is declared, translating into 2.2% yield. We continue to value Time Watch at 15x FY2008F PER, giving a revised target price of 52.5 cents on earnings raised. - Westcomb Securities (Sept 5)
Wednesday, September 12, 2007
Singapore Stock Corporate News and Announcements
CELESTIAL - RECEIVES TWO AWARDS AT THE SECOND ASIA BRAND CEREMONY
Yangzijiang - Shareholder's loan S$16m for Yangzhou Huanzhou Deck Material Co., Ltd, out of net proceed raised from IPO.
TIONG WOON - AWARDED ITS FIRST SHIPBUILDING CONTRACT WORTH S$64.8 MILLION, TO BE DELIVERED IN DEC 2008
CHINA PRECISION TECHNOLOGY LTD: Coy made provision of RMB7mill in relation to custom issues. Board of directors has completed its review and determined the quantum of the fines. There is an over-provision for the custom issues by RMB1.6mill and this will be reversed accordingly in group's PnL statement.
PORTEK: Secured a 25 year port management concession in Gabon, Central West Africa.
TECHOIL AND GAS: Secures 5.25mill of contracts from China Shipyards for shipboard automation systems. Both contracts due for delivery in 2008. Not expected to have any impact on current FY.
Swissco: S$15M order for 2 more offshore support vessels to be deliver 1H09 and placed with a Chinese Shipyard in Southern China. Fund through mixyure of internal funds & bank borrowings
Suntec REIT. share purchase agreement signed with Cavell Limited for acquisition by Suntec REIT of a one-third interest in One Raffles Quay through the acquisition of the entire issued share capital of Comina Investment Limited for an aggregate value of S$94.15 million, and payment in cash, by Suntec REIT to the Vendor.
China Petrotech: Acquired a third integrated oilfield services contract in Shaanbei, China through a wholly owned subsi. This will be a 7 year contract and will expire in 2013. They will be paid RMB22mil from this project.
WesTech: Coy secured a facility agreement for USD30mil. This will be a 3 year agreement splited into 2 tranches - 20mil senior term loan facility and 10mil on credit facility. Sum raised will be used for financing working capital and to grow cust base and enlarging orders.
Alantac: 2 key staff: 1. exec vp for group operation 2. senior vp resigned.
KS Energy: Acquired shares of Harta offshore and Marine service Pte holdings by Harta holdings (wholly owned subsi of KS). Transaction not expected to have any material impact on eps and nta of coy for FY2007.
* Darco Water Ltd - secured a S$40 million zero-coupon convertible bond financing facility from a major UK-based fund manager to fund its business expansion in Build-Own-Transfer (BOT) water treatment plants projects and working capital purposes
* Lereno Bio-chem Ltd - Entered into a sale & purchase agreement with Artech Design Ltd (South Korea) for the sale of the company's 207 dinosaur exihibits, accessories & 58 parts of moulds for a consideration of S$0.6M as part of the company's complete divestment of its non-core business in the edutainment segment
* Vibropower Ltd - received the inprinciple approval from the Singapore Exchange Securities Trading Limited for the listing and quotation of up to
692,307,692 new shares in the Company to be issued upon conversion of the Bonds.
* Brothers (Holdings) Ltd - V. Plus Venture Capital Pte Ltd, a wholly-owned
subsidiary of the Company, has reduced its investment in Oakwell Engineering Limited, an associated company of the Company, by disposing a total of 5,251,000 ordinary shares in the open market. Subsequent to the above disposal, the Company's shareholding in Oakwell has reduced from 20.84% to 19.96%. Accordingly, Oakwell ceases to be an associated company of the Company.
Fung Choi Media: Subsidary, Guangzhou Fung Choi Weixun Culture and Broadcasting Co., Ltd has established a new subsidiary in the People's Republic of China (Shanghai Fung Choi Weixun Culture and Broadcasting Co., Ltd)
MIDAS : It's Aluminium Alloy Division, Jilin Midas Aluminium Industries Co., Ltd ("Jilin Midas") has been awarded "2007 China's Top Brand" by the General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China ("AQSIQ")
Sembcorp Marine : 591,046,630 bonus shares have been allocated.
Global Testing : Wins taiwan's government prestigious industrial
achievement innovation award for their business strategy.
CELESTIAL - RECEIVES TWO AWARDS AT THE SECOND ASIA BRAND CEREMONY
Yangzijiang - Shareholder's loan S$16m for Yangzhou Huanzhou Deck Material Co., Ltd, out of net proceed raised from IPO.
TIONG WOON - AWARDED ITS FIRST SHIPBUILDING CONTRACT WORTH S$64.8 MILLION, TO BE DELIVERED IN DEC 2008
CHINA PRECISION TECHNOLOGY LTD: Coy made provision of RMB7mill in relation to custom issues. Board of directors has completed its review and determined the quantum of the fines. There is an over-provision for the custom issues by RMB1.6mill and this will be reversed accordingly in group's PnL statement.
PORTEK: Secured a 25 year port management concession in Gabon, Central West Africa.
TECHOIL AND GAS: Secures 5.25mill of contracts from China Shipyards for shipboard automation systems. Both contracts due for delivery in 2008. Not expected to have any impact on current FY.
Swissco: S$15M order for 2 more offshore support vessels to be deliver 1H09 and placed with a Chinese Shipyard in Southern China. Fund through mixyure of internal funds & bank borrowings
Suntec REIT. share purchase agreement signed with Cavell Limited for acquisition by Suntec REIT of a one-third interest in One Raffles Quay through the acquisition of the entire issued share capital of Comina Investment Limited for an aggregate value of S$94.15 million, and payment in cash, by Suntec REIT to the Vendor.
China Petrotech: Acquired a third integrated oilfield services contract in Shaanbei, China through a wholly owned subsi. This will be a 7 year contract and will expire in 2013. They will be paid RMB22mil from this project.
WesTech: Coy secured a facility agreement for USD30mil. This will be a 3 year agreement splited into 2 tranches - 20mil senior term loan facility and 10mil on credit facility. Sum raised will be used for financing working capital and to grow cust base and enlarging orders.
Alantac: 2 key staff: 1. exec vp for group operation 2. senior vp resigned.
KS Energy: Acquired shares of Harta offshore and Marine service Pte holdings by Harta holdings (wholly owned subsi of KS). Transaction not expected to have any material impact on eps and nta of coy for FY2007.
* Darco Water Ltd - secured a S$40 million zero-coupon convertible bond financing facility from a major UK-based fund manager to fund its business expansion in Build-Own-Transfer (BOT) water treatment plants projects and working capital purposes
* Lereno Bio-chem Ltd - Entered into a sale & purchase agreement with Artech Design Ltd (South Korea) for the sale of the company's 207 dinosaur exihibits, accessories & 58 parts of moulds for a consideration of S$0.6M as part of the company's complete divestment of its non-core business in the edutainment segment
* Vibropower Ltd - received the inprinciple approval from the Singapore Exchange Securities Trading Limited for the listing and quotation of up to
692,307,692 new shares in the Company to be issued upon conversion of the Bonds.
* Brothers (Holdings) Ltd - V. Plus Venture Capital Pte Ltd, a wholly-owned
subsidiary of the Company, has reduced its investment in Oakwell Engineering Limited, an associated company of the Company, by disposing a total of 5,251,000 ordinary shares in the open market. Subsequent to the above disposal, the Company's shareholding in Oakwell has reduced from 20.84% to 19.96%. Accordingly, Oakwell ceases to be an associated company of the Company.
Fung Choi Media: Subsidary, Guangzhou Fung Choi Weixun Culture and Broadcasting Co., Ltd has established a new subsidiary in the People's Republic of China (Shanghai Fung Choi Weixun Culture and Broadcasting Co., Ltd)
MIDAS : It's Aluminium Alloy Division, Jilin Midas Aluminium Industries Co., Ltd ("Jilin Midas") has been awarded "2007 China's Top Brand" by the General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China ("AQSIQ")
Sembcorp Marine : 591,046,630 bonus shares have been allocated.
Global Testing : Wins taiwan's government prestigious industrial
achievement innovation award for their business strategy.
Monday, September 10, 2007
Singapore stock news and announcements 10th sept
Keppel Corporation : It's wholly own-ed subsidary, Kephinance Investment
Pte Ltd, has acquired 465, 000 shares of K1 ventures limited, an
associated company of KCL.
KCL's interest in k1 ventures has increased from 35.21% to 35.23%
Sing Holdings Limited : It's subsidary, D9 Cairnhill Properties has increased it's issued and paid-up share capital from S$100 TO S$1,000,000 by an allotment and issue of
rights shares of 999,900 ordinary shares at s$1.00 per rights share.
Singapore Airport Terminal Services Limited (SATS) : Mr Clement Woon Hin Yong will be joining SATS as it's President and CEO from 1st November.
Before this appointment he was President, Geo Systems division of Leica Geosystems, a multinational corporation for spatial/surveying solutions.
OCBC: Share Buy-back
SC Global Developments : Issue price of each fully paid new share to shareholders who have elected to recieve the qualifying dividend shall be $4.84. Scrip Dividend Advices will be despatched on or about 12 September
2007 to Shareholders who have permanently elected to participate in the Scheme. Participating Shareholders who wish to cancel their permanent election should do so by completing and delivering to CDP a notice of cancellation.
LUNG KEE HOLDINGS LTD: Half yr results revenue up 26%, net profit up 100%, EPS (HK20.03 cents) up 100%. Substantial growth attributed to strong domestic consumption in China, as the automobile parts and accessories manufacturers enjoyed promising growth in orders. Expansion of the Heyuan plant in Guangdong province completed, further expanding the production capacity of the group.
CDW HOLDINGS: Clarified that interim dividend is 0.4US cents per share instead of 0.1US cents per share, to be paid on 5 Oct 2007.
UNITED INTERNATIONAL SECURITIES LTD: Announced that as of 5 Sept, group's unaudited NTA/share was S$2.02.
GOLDEN AGRI: Share split to 2 ordinary shares per current ordinary share.
Trading of sub-divided shares to commene on 11 Sept 9am
APAC STRATEGIC INVESTMENTS LTD: Revenue up 176% , Net profit up 18%.
Increas in revenue and gross profits were offset by higher expenses as company continued to build its selling/distribution channels and operations.
SINGTEL: Disposal of 49.9% of shareholding in Network i2i limited, selling to Bharti Airtel Limited for US$66.7mill. Gain on disposal will amount to approx S$104mill, of which s$72mill will be recognised in the 2Q ending 30 Sept 2007.
BANJOO: Company entering a MOU to acquire entire capital of Megatalk Pte Ltd from NTUC. Megatalk is principally engaged in providing telco services and related services. Proposed acquisition further enhances company's strategy to becoming the leading internet platform in PRC with proposed investments in online loterry, media and entertainment businesses.
Capital Land: Rock productions & capitaland develop integrated civic, cultural, retail & entertainment hub @ vista xchange, one-north on a 60 yr lease term @ a land bid price of S$188.988M expected to be completed by
2011
Financial One Corp: Financial One's taiwan subsidiary will increase its paid-in capital by placement of new shares 2 financial one & conversion of capital surplus.
Cambridge Industrial Trust - CIT to issue New Units for a private placement to raise up to S$193.9 million to fund the acquisition of the Target Properties
Armstrong - UK'sLloyd George raises stake from 4.11% to 5.43%. 2nd institutional fund to become substantial shareholder in 4 monthsL.loyd George manages over US$14.4 billion in assets in Asian and global emerging markets
Anwell has on 16 August 2007 subscribed for the third and fourth sub-tranches of the Tranche 1 Notes in the principal aggregate amountof S$2,000,000 (the "Third and Fourth Sub-tranche Notes") and a further sum of S$2,000,000 on 31 August 2007.
Pacific Healthcare extends India Operations with Strategic Investment in Heart Centres
- takes 15% stake in Cure Heart Limited which owns 68% of a cardiac care group in Bangalore and Goa, India
- Deal further reinforces Pacific's position as a regional premier healthcare services provider -Strengthens ties with Kuwait Finance House (Malaysia)B hd
Fibrechem. Rights issue of 1 rights share for every 4 fibrechem shares.
Rights shares par value at $0.01 each and conversion price at S$0.50.
Wing Tai Signed Memorandum Of Understanding To Form Joint Venture Company with Jin Li Group, to be part of the Chengdu city's efforts to renew and develop its city centre. To develop a potential gross floor area of about 900,000 sq ft.
UniFiber - isseud zero-coupon convertible bond due 2012 US$25m, conversion price of $0.355
Keppel Corporation : It's wholly own-ed subsidary, Kephinance Investment
Pte Ltd, has acquired 465, 000 shares of K1 ventures limited, an
associated company of KCL.
KCL's interest in k1 ventures has increased from 35.21% to 35.23%
Sing Holdings Limited : It's subsidary, D9 Cairnhill Properties has increased it's issued and paid-up share capital from S$100 TO S$1,000,000 by an allotment and issue of
rights shares of 999,900 ordinary shares at s$1.00 per rights share.
Singapore Airport Terminal Services Limited (SATS) : Mr Clement Woon Hin Yong will be joining SATS as it's President and CEO from 1st November.
Before this appointment he was President, Geo Systems division of Leica Geosystems, a multinational corporation for spatial/surveying solutions.
OCBC: Share Buy-back
SC Global Developments : Issue price of each fully paid new share to shareholders who have elected to recieve the qualifying dividend shall be $4.84. Scrip Dividend Advices will be despatched on or about 12 September
2007 to Shareholders who have permanently elected to participate in the Scheme. Participating Shareholders who wish to cancel their permanent election should do so by completing and delivering to CDP a notice of cancellation.
LUNG KEE HOLDINGS LTD: Half yr results revenue up 26%, net profit up 100%, EPS (HK20.03 cents) up 100%. Substantial growth attributed to strong domestic consumption in China, as the automobile parts and accessories manufacturers enjoyed promising growth in orders. Expansion of the Heyuan plant in Guangdong province completed, further expanding the production capacity of the group.
CDW HOLDINGS: Clarified that interim dividend is 0.4US cents per share instead of 0.1US cents per share, to be paid on 5 Oct 2007.
UNITED INTERNATIONAL SECURITIES LTD: Announced that as of 5 Sept, group's unaudited NTA/share was S$2.02.
GOLDEN AGRI: Share split to 2 ordinary shares per current ordinary share.
Trading of sub-divided shares to commene on 11 Sept 9am
APAC STRATEGIC INVESTMENTS LTD: Revenue up 176% , Net profit up 18%.
Increas in revenue and gross profits were offset by higher expenses as company continued to build its selling/distribution channels and operations.
SINGTEL: Disposal of 49.9% of shareholding in Network i2i limited, selling to Bharti Airtel Limited for US$66.7mill. Gain on disposal will amount to approx S$104mill, of which s$72mill will be recognised in the 2Q ending 30 Sept 2007.
BANJOO: Company entering a MOU to acquire entire capital of Megatalk Pte Ltd from NTUC. Megatalk is principally engaged in providing telco services and related services. Proposed acquisition further enhances company's strategy to becoming the leading internet platform in PRC with proposed investments in online loterry, media and entertainment businesses.
Capital Land: Rock productions & capitaland develop integrated civic, cultural, retail & entertainment hub @ vista xchange, one-north on a 60 yr lease term @ a land bid price of S$188.988M expected to be completed by
2011
Financial One Corp: Financial One's taiwan subsidiary will increase its paid-in capital by placement of new shares 2 financial one & conversion of capital surplus.
Cambridge Industrial Trust - CIT to issue New Units for a private placement to raise up to S$193.9 million to fund the acquisition of the Target Properties
Armstrong - UK'sLloyd George raises stake from 4.11% to 5.43%. 2nd institutional fund to become substantial shareholder in 4 monthsL.loyd George manages over US$14.4 billion in assets in Asian and global emerging markets
Anwell has on 16 August 2007 subscribed for the third and fourth sub-tranches of the Tranche 1 Notes in the principal aggregate amountof S$2,000,000 (the "Third and Fourth Sub-tranche Notes") and a further sum of S$2,000,000 on 31 August 2007.
Pacific Healthcare extends India Operations with Strategic Investment in Heart Centres
- takes 15% stake in Cure Heart Limited which owns 68% of a cardiac care group in Bangalore and Goa, India
- Deal further reinforces Pacific's position as a regional premier healthcare services provider -Strengthens ties with Kuwait Finance House (Malaysia)B hd
Fibrechem. Rights issue of 1 rights share for every 4 fibrechem shares.
Rights shares par value at $0.01 each and conversion price at S$0.50.
Wing Tai Signed Memorandum Of Understanding To Form Joint Venture Company with Jin Li Group, to be part of the Chengdu city's efforts to renew and develop its city centre. To develop a potential gross floor area of about 900,000 sq ft.
UniFiber - isseud zero-coupon convertible bond due 2012 US$25m, conversion price of $0.355
Sunday, September 09, 2007
THE EDGE ISSUE - SEP 03 - SEP 09, 2007.
COVER PAGE : Waiting out the STORM - Close to 80% of retail funds in Singapore lost money during the last three months.
COVER STORY : Equities still the preferred asset class(Page PW 2)
COVER STORY : Brazil valuations and earnings grow attractive(Page PW 4)
Doors to world's biggest casino open (Page 4)
S&P's Corbet leaves amid subprime fallout (Page 4)
Global overview : Who's the borrower ? (Page 6)
Tan Kim Seng's son among C2O's new investors (Page 8 )
Aussino lays the foundation for next growth spurt (Page 10)
Thorns in DBS's ROSA (Page 12)
Hotung now on a stronger footing, looks to China for new investments (Page 14)
WesTech's new share placement unlikely to satisfy all its funding needs (Page 16)
Pan Hong expands landbank amid heightened nervousness (Page 18 )
Cash is not always king (Page 18 )
Bouncing back with Centillion (Page 21)
Linair earnings soar on booming business in China, prepares for push into Mid East (Page 22)
Soft options for hard drives (Page 23)
Magnecomp's sale of HDD business a sign of industry maturity (Page 23)
Nokia's new door to revenue (Page 24)
Malaysian carriers flying high (Page 25)
Should Singapore worry about rising inflation ? (Page 26)
Why some nations stumble, others soar (Page 27)
When floodgates of Chinese capital open (Page 28 )
Another volatile week (Page 29)
Uni-Asia Finance : Riding the ship-financing and asset management wave (Page 30)
Buyout funds face elusive returns (Page 31)
Kuik family ups stake in Sim Lian Group (Page 34)
Fighting for quality (Page 40)
Dog days for the market (Page 40)
CITY & COUNTRY:
Ascendas India Trust : Ahead of the Game (Page CC 1)
Foreign investor appetite in India still strong (Page CC 5)
Mumbai rents are at 'exorbitant' levels (Page CC 6)
UK Lenders tighten subprime credit (Page CC 6)
Billionaire Adelson weighs India, Japan plans at Macau opening (Page CC 7)
BROKERS DIGEST:
Chemoil Energy (Aug 60: 62.5 US cents) TP: US$1.02
BUY (initiating coverage). Chemoil is a global leader in the marine-fuel supply chain. Chemoil has a very strong track record of delivering growth, which we expect will continue. The main drivers for the company's earnings growth will be the US$300 million ($457.5 million) capex programme, which should improve operational efficiencies such that the gross contribution per tonne increases from US$9.10 per ton in 2006 to US$10.50 per ton in 2008-09F. We estimate sales volumes will increase by 5% per annum, which is above the industry growth rate of 4% in the past decade, We derive our target price of US$1.02 (70% potential upside) using a three-stage DCF valuation, assuming a weighted average cost of capital (WACC) of 8.87%. - ABN Amro Research (Aug 27)
GuocoLand (Holdings) (Aug 30: $4.72) TP: $5.55
MAINTAIN BUY. 4Q2007 revenue grew 506% y-o-y to $361 million with profit after tax and minority interest increasing 262% to 194.7 million. This was due to higher contributions from projects in Singapore and Beijing, as well as revaluation of their investment properties, mostly from Tung Centre in Collyers Quay ($116.3 million) and the gain on the sale of BIL ($19.3 million). Cash and cash equivalents increased to $1.1 billion after it issued $690 million worth of convertible bonds in April. GuocoLand is proposing a final cash dividend of eight cents per share, the same as last year. We have fine-tuned our FY2008 and introduced FY2009 numbers and maintain a target price of $5.55, with a 10% premium due to its multinational exposure. - DBS Vickers Securities (Aug 27)
Rotary Engineering (Aug 30: $1.19) TP: $1.53
MAINTAIN BUY. Rotary recently reported a strong set of 1H2007 results, with turnover of $272 million and a record net profit of $28 million. The increase in turnover was largely due to revenue recognition from several ongoing projects on Jurong Island, namely the $547 million Universal Terminal project, which is 80% completed. We are revising up our revenues from $490 million to $549 million in FY2007 and from $537 million to $608 million in FY2008. Subsequently, our net profit estimates have been raised to $46.y million in FY2007 and $50.2 million in FY2008. We value Rotary on 18x PER FY07/08 blended earnings, a slight discount to the industry average PER of 21x. Our fair value estimate for the stock is raised by 27.5% to $1.53. - OCBC Investment Research (Aug 28)
China Haida (Aug 30: 24 cents) TP: 43 cents
MAINTAIN BUY. CH delivered revenue of 219.2 million renminbi ($44.3 million) in 1HFY2007. Gross margin suffered a 3.4 percentage point cut to yield a gross profit of 181.4 million renminbi, as a result of higher raw materials costs for aluminium panels. Profit before tax grew 12.8% while net profit after tax plunged to 17.1 million renminbi, 8.8% below 18.7 million renminbi in 1HFY2006. This is due to the cessation of concessionary tax rates of 12% and the application of the full tax rate of 27% and the inclusion of some non-tax deductible items. CH is trading at 5.5x FY2007F PER and 4.1x FY2008F PER. Our target price of 43 cents is derived on 8x FY2008F EPS. At the current share price of 26 cents, it is supported by 1x P/NTA FY2008F and 0.1x PEG FY08F. - Westcomb Securities (Aug 27)
Hiap Seng Engineering (Aug 30: 83.5 cents) TP: 84 cents
MAINTAIN BUY. The group recorded impressive FY2007 revenue and profits. Turnover grew 63.1% to $180.8 million, driven largely by the strong uptake of compression and process projects. Operating profits surged by 171.6% to $18.56 and profits attributable to shareholders grew 175% to $15.436 million. Gross margin for FY2007 improved to 17.66% from 13.36%, driven by the conscious efforts in project management control and cost controls. Its order book currently stands at about $226.2 million. With the current buoyancy of the oil and gas industry, we expect its full-year order book to be about $300 million. Using a DCF model, the fair value of Hiap Seng is pegged at 84 cents. At the current price of 81 cents, the counter offers an upside potential of 16%. - NRA Research (Aug 29)
SMB United (Aug 30: 36 cents) TP: 54 cents
MAINTAIN HOLD.SMB United reported a good set of 1H2007 results with net profit of $8.9 million on revenue of $76.8 million. The 1H2007 performance included a gain of $3.1 million from the divestment of Oculus shares (balance of $3.3 million to be booked in 2H2007) and reversal of provision for doubtful debt of $1.6 million. SMB United has declared special dividend of 1.3 cents per share as a distribution for the gain of $6.4 million from the divestment of 22.5 million Oculus shares. We forecast earnings growth of 57.1% in FY2007, driven by volume and margin expansion for switchgear business. We expect earnings growth of 40.5% in FY2008, driven by contribution from contracts related to the integrated resorts. Our target price is 54 cents based on FY2008 PER of 15x. - UOB KayHian (Aug 24)
Federal Int'l (Aug 30: 78.5 cents) TP: $1.03
BUY (initiating coverage). The company has over the past two years made great strides into new businesses and is now reaping the profits of its labours. From a valve trading business, Federal now manufactures oil-and-gas equipment; owns a floating, storage and offloading vessel; has a contract for a power generation plant; and has delved into several joint ventures to expand its revenue base and create more recurring incomes. Federal's order book currently stands at about $229.5 million and we see them actively growing their base with more long-term contracts. FY2007 should see a 44% growth while expectations for FY2008 are at 25.6% net profit growth. Target price is $1.03, citing an upside of 36.8%. - OSK Research (Aug 28)
Olam Int'l (Aug 30: $3.02) TP: $3.57
MAINTAIN BUY. Olam announced a FY2007 net profit of $109 million, up 25.0% y-o-y. This was in line with our estimation of $109.5 million. On a per share basis, Olam recorded a 7.01 cents EPS for FY2007, a 25% increase from the 5.61 cents achieved in FY2006. Strong growth is driven by growth in sales volume and net contribution across all business segments. In our valuation model, we assume an average growth rate of 26% compound annual growth rate over the initial high growth period from FY2008-13 inclusive. Most of the five major acquisitions announced this year are expected to be earnings-accretive by mid-FY2008. Our valuation yield a fair value of $3.57, which translates to a FY2008 PER of 40.4x and P/BV of 10.8x. - Phillip Securities Research (Aug 30)
Thai Beverage Public Co (Aug 30: 25 cents) TP: 24 cents
MAINTAIN SELL. The Thai cabinet passed higher excise taxes on liquor and cigarettes, effective Aug 29. The new tax increases should affect Thai Beverage's white spirits, its Hong Thon brown spirits and its mid-range Scotch whisky products. Sangsom brown spirits products appear unaffected. We see a lack of growth drivers for Thai Beverage and believe the company also faces emerging threats, which could cause sales to decline. Our 24-cent target price for ThaiBev is based on our DCF analysis, which uses a WACC of 9.2% (beta of 0.75) and models a time horizon to 2014. Therafter, we assume a realistic 2% terminal growth rate. Based on our DCF valuation, the implied target PER is 11.5x FY2007E EPS. - Citigroup Research (Aug 28)
PERSONAL WEALTH SECTION:
Fund strategy in a volatile market (Page PW 1)
Commodity funds trounce falling stocks (Page PW 5)
Hedge fund investors trying to redeem the unknown (Page PW 5)
The Fed, investor confidence and volatility (Page PW 8 )
VOLUME MOVERS:
Centillion Environment and Recycling Ltd
Oculus Ltd
LC Development Ltd
Lian Beng Group Ltd
HOT STOCKS: THE TIDE GOES OUT FOR SOME MARINE STOCKS
COSCO CORP - Superior relative strength (Support at $4.62, a successful break above $5 mark indicates a target of $6.30)
Labroy Marine - Breakdown (A break below $2 indicates a target of $1.65)
Sembcorp Industries - Possible retreat (Resistance at $5.50. A pull back is likely to $5.25. A Break below this level will lead to a downside of $4.64)
Keppel Corp - Rebound ahead (Support at $12.30, Next upside is $14.00)
SembCorp Marine - Testing resistance, attempting breakout (tp = $4.80)
ASL Marine - Could break down (tp = $1.20
COVER PAGE : Waiting out the STORM - Close to 80% of retail funds in Singapore lost money during the last three months.
COVER STORY : Equities still the preferred asset class(Page PW 2)
COVER STORY : Brazil valuations and earnings grow attractive(Page PW 4)
Doors to world's biggest casino open (Page 4)
S&P's Corbet leaves amid subprime fallout (Page 4)
Global overview : Who's the borrower ? (Page 6)
Tan Kim Seng's son among C2O's new investors (Page 8 )
Aussino lays the foundation for next growth spurt (Page 10)
Thorns in DBS's ROSA (Page 12)
Hotung now on a stronger footing, looks to China for new investments (Page 14)
WesTech's new share placement unlikely to satisfy all its funding needs (Page 16)
Pan Hong expands landbank amid heightened nervousness (Page 18 )
Cash is not always king (Page 18 )
Bouncing back with Centillion (Page 21)
Linair earnings soar on booming business in China, prepares for push into Mid East (Page 22)
Soft options for hard drives (Page 23)
Magnecomp's sale of HDD business a sign of industry maturity (Page 23)
Nokia's new door to revenue (Page 24)
Malaysian carriers flying high (Page 25)
Should Singapore worry about rising inflation ? (Page 26)
Why some nations stumble, others soar (Page 27)
When floodgates of Chinese capital open (Page 28 )
Another volatile week (Page 29)
Uni-Asia Finance : Riding the ship-financing and asset management wave (Page 30)
Buyout funds face elusive returns (Page 31)
Kuik family ups stake in Sim Lian Group (Page 34)
Fighting for quality (Page 40)
Dog days for the market (Page 40)
CITY & COUNTRY:
Ascendas India Trust : Ahead of the Game (Page CC 1)
Foreign investor appetite in India still strong (Page CC 5)
Mumbai rents are at 'exorbitant' levels (Page CC 6)
UK Lenders tighten subprime credit (Page CC 6)
Billionaire Adelson weighs India, Japan plans at Macau opening (Page CC 7)
BROKERS DIGEST:
Chemoil Energy (Aug 60: 62.5 US cents) TP: US$1.02
BUY (initiating coverage). Chemoil is a global leader in the marine-fuel supply chain. Chemoil has a very strong track record of delivering growth, which we expect will continue. The main drivers for the company's earnings growth will be the US$300 million ($457.5 million) capex programme, which should improve operational efficiencies such that the gross contribution per tonne increases from US$9.10 per ton in 2006 to US$10.50 per ton in 2008-09F. We estimate sales volumes will increase by 5% per annum, which is above the industry growth rate of 4% in the past decade, We derive our target price of US$1.02 (70% potential upside) using a three-stage DCF valuation, assuming a weighted average cost of capital (WACC) of 8.87%. - ABN Amro Research (Aug 27)
GuocoLand (Holdings) (Aug 30: $4.72) TP: $5.55
MAINTAIN BUY. 4Q2007 revenue grew 506% y-o-y to $361 million with profit after tax and minority interest increasing 262% to 194.7 million. This was due to higher contributions from projects in Singapore and Beijing, as well as revaluation of their investment properties, mostly from Tung Centre in Collyers Quay ($116.3 million) and the gain on the sale of BIL ($19.3 million). Cash and cash equivalents increased to $1.1 billion after it issued $690 million worth of convertible bonds in April. GuocoLand is proposing a final cash dividend of eight cents per share, the same as last year. We have fine-tuned our FY2008 and introduced FY2009 numbers and maintain a target price of $5.55, with a 10% premium due to its multinational exposure. - DBS Vickers Securities (Aug 27)
Rotary Engineering (Aug 30: $1.19) TP: $1.53
MAINTAIN BUY. Rotary recently reported a strong set of 1H2007 results, with turnover of $272 million and a record net profit of $28 million. The increase in turnover was largely due to revenue recognition from several ongoing projects on Jurong Island, namely the $547 million Universal Terminal project, which is 80% completed. We are revising up our revenues from $490 million to $549 million in FY2007 and from $537 million to $608 million in FY2008. Subsequently, our net profit estimates have been raised to $46.y million in FY2007 and $50.2 million in FY2008. We value Rotary on 18x PER FY07/08 blended earnings, a slight discount to the industry average PER of 21x. Our fair value estimate for the stock is raised by 27.5% to $1.53. - OCBC Investment Research (Aug 28)
China Haida (Aug 30: 24 cents) TP: 43 cents
MAINTAIN BUY. CH delivered revenue of 219.2 million renminbi ($44.3 million) in 1HFY2007. Gross margin suffered a 3.4 percentage point cut to yield a gross profit of 181.4 million renminbi, as a result of higher raw materials costs for aluminium panels. Profit before tax grew 12.8% while net profit after tax plunged to 17.1 million renminbi, 8.8% below 18.7 million renminbi in 1HFY2006. This is due to the cessation of concessionary tax rates of 12% and the application of the full tax rate of 27% and the inclusion of some non-tax deductible items. CH is trading at 5.5x FY2007F PER and 4.1x FY2008F PER. Our target price of 43 cents is derived on 8x FY2008F EPS. At the current share price of 26 cents, it is supported by 1x P/NTA FY2008F and 0.1x PEG FY08F. - Westcomb Securities (Aug 27)
Hiap Seng Engineering (Aug 30: 83.5 cents) TP: 84 cents
MAINTAIN BUY. The group recorded impressive FY2007 revenue and profits. Turnover grew 63.1% to $180.8 million, driven largely by the strong uptake of compression and process projects. Operating profits surged by 171.6% to $18.56 and profits attributable to shareholders grew 175% to $15.436 million. Gross margin for FY2007 improved to 17.66% from 13.36%, driven by the conscious efforts in project management control and cost controls. Its order book currently stands at about $226.2 million. With the current buoyancy of the oil and gas industry, we expect its full-year order book to be about $300 million. Using a DCF model, the fair value of Hiap Seng is pegged at 84 cents. At the current price of 81 cents, the counter offers an upside potential of 16%. - NRA Research (Aug 29)
SMB United (Aug 30: 36 cents) TP: 54 cents
MAINTAIN HOLD.SMB United reported a good set of 1H2007 results with net profit of $8.9 million on revenue of $76.8 million. The 1H2007 performance included a gain of $3.1 million from the divestment of Oculus shares (balance of $3.3 million to be booked in 2H2007) and reversal of provision for doubtful debt of $1.6 million. SMB United has declared special dividend of 1.3 cents per share as a distribution for the gain of $6.4 million from the divestment of 22.5 million Oculus shares. We forecast earnings growth of 57.1% in FY2007, driven by volume and margin expansion for switchgear business. We expect earnings growth of 40.5% in FY2008, driven by contribution from contracts related to the integrated resorts. Our target price is 54 cents based on FY2008 PER of 15x. - UOB KayHian (Aug 24)
Federal Int'l (Aug 30: 78.5 cents) TP: $1.03
BUY (initiating coverage). The company has over the past two years made great strides into new businesses and is now reaping the profits of its labours. From a valve trading business, Federal now manufactures oil-and-gas equipment; owns a floating, storage and offloading vessel; has a contract for a power generation plant; and has delved into several joint ventures to expand its revenue base and create more recurring incomes. Federal's order book currently stands at about $229.5 million and we see them actively growing their base with more long-term contracts. FY2007 should see a 44% growth while expectations for FY2008 are at 25.6% net profit growth. Target price is $1.03, citing an upside of 36.8%. - OSK Research (Aug 28)
Olam Int'l (Aug 30: $3.02) TP: $3.57
MAINTAIN BUY. Olam announced a FY2007 net profit of $109 million, up 25.0% y-o-y. This was in line with our estimation of $109.5 million. On a per share basis, Olam recorded a 7.01 cents EPS for FY2007, a 25% increase from the 5.61 cents achieved in FY2006. Strong growth is driven by growth in sales volume and net contribution across all business segments. In our valuation model, we assume an average growth rate of 26% compound annual growth rate over the initial high growth period from FY2008-13 inclusive. Most of the five major acquisitions announced this year are expected to be earnings-accretive by mid-FY2008. Our valuation yield a fair value of $3.57, which translates to a FY2008 PER of 40.4x and P/BV of 10.8x. - Phillip Securities Research (Aug 30)
Thai Beverage Public Co (Aug 30: 25 cents) TP: 24 cents
MAINTAIN SELL. The Thai cabinet passed higher excise taxes on liquor and cigarettes, effective Aug 29. The new tax increases should affect Thai Beverage's white spirits, its Hong Thon brown spirits and its mid-range Scotch whisky products. Sangsom brown spirits products appear unaffected. We see a lack of growth drivers for Thai Beverage and believe the company also faces emerging threats, which could cause sales to decline. Our 24-cent target price for ThaiBev is based on our DCF analysis, which uses a WACC of 9.2% (beta of 0.75) and models a time horizon to 2014. Therafter, we assume a realistic 2% terminal growth rate. Based on our DCF valuation, the implied target PER is 11.5x FY2007E EPS. - Citigroup Research (Aug 28)
PERSONAL WEALTH SECTION:
Fund strategy in a volatile market (Page PW 1)
Commodity funds trounce falling stocks (Page PW 5)
Hedge fund investors trying to redeem the unknown (Page PW 5)
The Fed, investor confidence and volatility (Page PW 8 )
VOLUME MOVERS:
Centillion Environment and Recycling Ltd
Oculus Ltd
LC Development Ltd
Lian Beng Group Ltd
HOT STOCKS: THE TIDE GOES OUT FOR SOME MARINE STOCKS
COSCO CORP - Superior relative strength (Support at $4.62, a successful break above $5 mark indicates a target of $6.30)
Labroy Marine - Breakdown (A break below $2 indicates a target of $1.65)
Sembcorp Industries - Possible retreat (Resistance at $5.50. A pull back is likely to $5.25. A Break below this level will lead to a downside of $4.64)
Keppel Corp - Rebound ahead (Support at $12.30, Next upside is $14.00)
SembCorp Marine - Testing resistance, attempting breakout (tp = $4.80)
ASL Marine - Could break down (tp = $1.20
Dow Jones Index daily chart comments :
Based on various technical indicators
1.parabolic SAR remains positive BUT the gap between the trigger and the index is closing (similar to the comments i made about Hang Seng Index) so the short term uptrend has been running out of steam the past few days
2.stochastics - formed lower highs recently on 4th sept when Dow Jones hit higher high (hmm….also similar pattern to HSI) indicating recent rebound momentum could be running out of steam
3.MACD - daily MACD line has crossed over the signal line since 23rd aug BUT remains below the zero line. Of the two signals, some traders consider zeroline cross over to be more reliable and signal line crossover.
4. Multiple moving averages(MMA) -
short term MMA remains well below long term MMA indicating that medium to longer term trend is still down
Based on the above indicators :
The dow jones index daily chart is showing near term mix signals but more biased towards the bearish side, indicating rebound momentum has been weakening in the past few days.
For US stock market technical analysis video comments dated 7th sept, click :
http://www.mojostock.com/forums/showthread.php?t=26989
Artilce by : Rooney Yong
Dowjones reported that
2 parties expressing interest, with offer price tipped at S$0.50/share.
"I suspect it's Temasek Holdings selling out and somebody is buying,"
says analyst, who doesn't want to be named; "I doubt there's going to be a bidding war because under the current market scenario, investors are a lot more cautious in terms of raising money given the possible credit crunch." Tips private equity fund as possible buyer; "we haven't heard fellow companies expressing an interest." According to company's 2006 annual report, Temasek Holdings owns 7.42% of Sunningdale. Sunningdale spokesman says firm not aware of any offer.
DMG :
Hor Kew Corporation is a recovery story, built on twin drivers of
scaling up residential development income and reversing losses from
construction and pre-fabrication operations. Sizeable contributions from
its 2 projects, One Oxley Rise and the upcoming
development, are underpinned by high average selling prices and low
breakeven costs. Greater prefabrication volume coupled with improving
margins should support a turnaround in manufacturing contributions.
Meanwhile, potential for increasing construction profits, in tandem with
the robust industry, could provide room for earnings upside surprise.
Enhancement of shareholder value through renewing older industrial
assets could add another 2-3cts to asset backing. Recommend Buy with a
price target of $0.28.
CIMB maintains OUTPERFORM call on singapore stock China Hongxing Sports
CIMB comments :
"Brand visibility precedes pricing power
Although Hongxing may be trailing Li Ning in terms of brand recognition and retail presence, Hongxing has the ability to further raise ASPs given
that its products are still affordably priced at approximately Rmb250-290 in the mid-end segment. The group has also been increasing retail footage
for apparel and accessories. We project prices for these products to rise as well with new designs and improvement in product mix. We caught up
with management recently to gain further insight into its expansion plans for FY07-08 in view of the upcoming Olympics. To assist its distributors
with the opening of the additional 400 stores while mitigating credit risk, Hongxing will be sub-leasing stores to distributors who will continue
to bear operating expenses and inventory risk. We have fine-tuned our estimates to reflect higher gross margins.
Reiterate Outperform, with an unchanged target price of S$1.20 based on 24x CY08 EPS, which translates into 29x CY08 FD EPS, in line with
sports shoe peers' average."
UOB technical analysis comments for
We feature some of these stocks.
1. China XLX- After falling from a high of $1.45, the stock has managed to establish a base near $0.90-0.925. Volume has also picked up significantly over the past 2 days suggesting increasing interest in the stock. Some of the resistance levels to watch out for are the $1.05 and the $1.13 level.
The double bottom pattern suggests that resistance at $1.13 will very likely be tested.
2.
3. Ascendas Reit- Stock had fallen sharply from a high of $3.30 to a low of $2.30. At overnight close of $2.42, the stock offers a yield of 5.2% for FY07. We think the stock could potentially head towards $$2.65-2.70 in the near term.
BNP maintains BUY on singapore stock SIM LIAN – TP: SGD1.06
"Riding high on construction and property booms
Good progress;
Contractor-cum-developer – Leveraging the construction boom Recently, BCA revised its construction demand forecast for 2007 upward to between SGD19b and SGD22b. With its outstanding capabilities and strong construction outlooks in
Attractive valuation among peers
Although some of its peers are also doing well, we admire Sim Lian’s strong overall performance and its attractive valuation. Its margins are in line with its peers, averaging around 19.9% (gross) and 12.8% (net), but it has high ROE of 26.4% against the industry average of 14.5%.
Good progress; maintain BUY with TP at SGD1.06 Given its significant land bank of 2.4m sq ft GFA, we forecast Sim Lian will continue to achieve strong growth in the next three years. We maintain our BUY with revised target price to SGD1.06 from SGD1.00, and raise our profit estimates for FY08 and onward, reflecting higher margins, together with higher construction order book outlook. "
Kim Eng initiates BUY on
"Foreland currently trades at 8x FY07 EPS, a discount to its peer average of
10x FY07 EPS. We see fair value at 62 cents, in line with our PER and DCF
valuations. Foreland’s single-digit valuation is very attractive considering its
above-30% growth momentum and industry-leading gross margins. The
group’s competitive edge in the functional fabrics and sizable advance
production facilities constitute a strong value proposition. Recent share
buyback by the chairman signals his confidence in the group’s prospects."
UOB-KayHian initiates BUY call on Singapore stock China Farm Equipment with S$0.81 target, based on 13X FY07 P/E.
UOB says the singapore listed China based company is seeing strong demand for farm equipment as Beijing wants to quickly raise agriculture sector''s mechanization rate to improve efficiency as more farmers move to cities to look for work amid rising urbanization. UOB adds China Farm has strong market position and offers solid foundation for further growth as its products are specially tailored according to the similar geographical features of the four provinces (
DBS initiate BUY on singapore stock HupSteel Ltd
"Hupsteel is an established steel stockist, leveraging on its close ties with steel mills to secure supplies of a wide range of steel products for their customers in the oil and gas, marine, and construction sectors in an efficient manner.
Point: Robust growth in the demand for steel is expected to continue into the next couple of years with shipyards in the region continuing to experience strong order book growth. In addition, demand from the construction sector is expected to kick in with major construction projects such as the Integrated Resorts and
Relevance: We have forecast an earnings growth of 18.3% and 17.9% in FY08 and FY09 respectively, to $36.9m and $43.5m. Given its exposure to the strong growth sectors and buoyant earnings outlook, we believe a 10x PE on
FY08 earnings is undemanding. This works out to a fair value of $0.73 for Hupsteel, which represents an upside of 38% to its last traded price. We therefore initiate coverage with a BUY."
OCBC initiate BUY call on
"We are initiating coverage on Federal International with a BUY rating and a fair value estimate of S$1.05. It recently delivered a strong set of 1H07 results with net profit up 45% YoY to S$7.8m. Following the recent succesful conversion of a FSO, Federal has announced a slew of other projects, broadening its earnings base from its core trading business and more importantly, developing a stream of sustainable recurring income. In June, it signed a 12-year Power & Steam Purchase agreement with Natural Fuel Ltd (NFL) for a cogen facility. This deal comes with several interesting features including a long term contract, sale of surplus energy to the grid with revenues shared on a pre-deterrmined basis, ability to generate carbon credits, and as a platform to potentially secure a second cogen plant. We are projecting net profits of S$17.0m for FY07 and S$20.0m for FY08. Our fair value estimate is based on 15x FY07 diluted earnings and offers a potential upside of 32% from current price level."
CIMB initiate Outperform call on
CIMB comments :
Initiating coverage - Leading rubber chemical specialist by Jessie LAI
Leading rubber chemicals producer in the world, by production
capacity. China Sunsine Chemical Holdings (Sunsine) principally
engages in the production of rubber chemicals, essential for rubber
production. Capacity of its key product, rubber accelerators, is
slated to expand 56% to 50,000 tonnes p.a. by end-09, elevating the
company to the largest rubber accelerator producer in the world.
World renowned customer base and strong relationships. Sunsine's
customer base includes all ten of the world's ten largest tyre
producers, and major tyre producers in
quality of Sunsine's products and its credibility in consistent
delivery.
FY06 and 1H07, respectively.
Deepening of customer relationships. Sunsine's targeted marketing
efforts at large tyre customers ensure recurring and increasingly
larger orders, and the opportunity to cross-sell different rubber
chemical products to the same customer.
Sales and profits set to grow by 28% and 24% CAGR for FY07-09,
respectively. Growth should be fuelled by the 56% expansion in rubber
accelerator capacity and contributions from new rubber chemical
products. Projected 3-year EPS CAGR for FY07-09 is lower at 13% due
to share capital dilution post-IPO.
Initiate coverage with Outperform and target price of S$0.50, based
on 12x CY08 earnings, in line with international peers, Lanxess and
Chemtura. Compared to SGX-listed peers (9x CY08 P/E), we believe
Sunsine should be valued at a premium given its more established
brand name in the specialty chemicals space, and its strong clientele
base. We see potential catalysts from evidence of Sunsine passing on
its increased costs to customers, and any M&A announcements.
DBS initiates BUY on signapore stock KSH Holdings :
Story: With over 20 years of experience, KSH is a well-established and reputable main contractor in
Point: With a huge orderbook of S$332m (2.5x FY07 revenue) as of
Relevance: We believe that valuations for KSH are undemanding at 10.3 FY 08 earnings, compared to peers such as Yongnam, which are trading at 24x current earnings. Furthermore, KSH has interests in properties that are worth at least 45cts per share. We have a target price of S$1.52 for KSH based on 9X FY09 PER. The price upside potential to our fair value estimate is 60%. We are initiating coverage on KSH with a BUY rating.
Chinese Government Tightening The Tap
China ordered banks to put aside more money as reserves for the seventh time this year to cool lending and investment after inflation accelerated to a 10-year high. Lenders must park 12.5 percent of deposits with the central bank from Sept. 25, up from 12 percent, the People's Bank of China said today. The ratio is the highest in almost 10 years.
Premier Wen Jiabao said the government needs to prevent the world's fastest-growing major economy from overheating, in a televised speech minutes before the announcement. China is trying to prevent cash from record trade surpluses from driving up consumer prices and fueling asset bubbles. July's inflation rate was 5.6 percent.
"The central bank is concerned about inflation and they need to absorb the billions of dollars flowing into the country every month,'' said Liang Hong, senior economist at Goldman Sachs Group Inc. in Hong Kong.
Each 0.5 percentage point increase in the reserve ratio drains about 186 billion yuan ($25 billion) from the banking system. Local-currency deposits stood at 37.1 trillion yuan at the end of July. The economy expanded 11.9 percent in the second quarter from a year earlier, the fastest pace in more than 12 years. The trade surplus surged 67 percent in July from a year earlier to $24.4 billion, the second-highest monthly total.
The benchmark one-year lending rate rose to a nine-year high of 7.02 percent on Aug. 22. That was the fourth increase since March.
source : Bloomberg
China ordered banks to put aside more money as reserves for the seventh time this year to cool lending and investment after inflation accelerated to a 10-year high. Lenders must park 12.5 percent of deposits with the central bank from Sept. 25, up from 12 percent, the People's Bank of China said today. The ratio is the highest in almost 10 years.
Premier Wen Jiabao said the government needs to prevent the world's fastest-growing major economy from overheating, in a televised speech minutes before the announcement. China is trying to prevent cash from record trade surpluses from driving up consumer prices and fueling asset bubbles. July's inflation rate was 5.6 percent.
"The central bank is concerned about inflation and they need to absorb the billions of dollars flowing into the country every month,'' said Liang Hong, senior economist at Goldman Sachs Group Inc. in Hong Kong.
Each 0.5 percentage point increase in the reserve ratio drains about 186 billion yuan ($25 billion) from the banking system. Local-currency deposits stood at 37.1 trillion yuan at the end of July. The economy expanded 11.9 percent in the second quarter from a year earlier, the fastest pace in more than 12 years. The trade surplus surged 67 percent in July from a year earlier to $24.4 billion, the second-highest monthly total.
The benchmark one-year lending rate rose to a nine-year high of 7.02 percent on Aug. 22. That was the fourth increase since March.
source : Bloomberg
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