Singapore stock market news :
Tat Hong issues profit warning, DBS downgrades call, CIMB and CSFB maintains Outperform calls :
DBS downgrades to fully-valued with target price S$0.62 :
Tat Hong alerts investors that its 3QFY09 earnings would be lower yoy, blames on forex losses and lower equipment sales. We have already imputed the weak earnings in our FY09-10 forecast, which are 16%-32% below consensus. Our TP is revised down to S$0.62, based on lower multiple of 0.8x P/NTA. This implies a 10% downside from current share price. The stock has appreciated 20% since our upgrade in November. We advise investors to take profit now. Downgrade to FULLY VALUED.
CIMB maintains Outperform with lower target price of $0.90 :
To account for the adverse currency impact as well as slower demand,
we have cut our forecasts by 14-22% for FY09-11, mainly for its trading business,
which includes spare parts. We also reduce our forecasts for its rental segment by about 7%, to be conservative. Despite the above, we believe TAT’s longer-term fundamentals remain good, as management has been proactive in increasing its business resilience by developing its rental business, while taking measures to reduce trading inventory during this downturn. Management and the Ng family have also been purchasing TAT shares in past months, underscoring their confidence in the business. We maintain Outperform, albeit with a reduced target price of S$0.90 (previously S$0.93) following our earnings reductions. Our target is still based on 0.8x CY09 P/BV.
CSFB maintains Outperfom with target price S$0.95 :
These events were anticipated, and have in aggregate, driven our recent earnings downgrade. We have factored in a weaker 2H09, both on a HoH and YoY basis, as we expect equipment sales, contributing an estimated 30% of total revenue in 2H09, and 24% of total profit, would fall 54% YoY and 57% HoH. This suggests that downside risks to our FY09E forecasts, as well as that of consensus, are limited. We therefore believe that management has been conservative in issuing the profit guidance announcement, and also note the fervent insider buying activities since Aug. 2008. Near term, however, we believe that Tat Hong’s shares could see weakness from profit-taking, given the strong 73% rally since Oct. 2008. We continue to view Tat Hong as well-leveraged into construction sector demand across Asia, which is expected to remain strong over the medium term, given its operational scale, a clear growth strategy, and strong balance sheet. Tat Hong currently trades on 0.8x P/B, at a-fifth of its historical high of S$3.42 in Nov. 2007, about 35% to its historical lows (of 0.5x P/B), and with a 10.5% dividend yield support.
rooney
Monday, January 19, 2009
Friday, January 16, 2009
Singapore stock market news :
UOB Research upgrades ST Engineering to BUY with target price set at S$2.83 based on the following reasons :
1. ST Engineering (STE) announces that its aerospace division has secured
a 20-year engine maintenance programme with GE Aviation.
2. US airlines load factor improves in December and the number of aircraft
in storage tops out in October.
We have not adjusted our 2010 numbers but have accorded a higher PE
rating to the stock. The agreement with GE Aviation will provide long-term
earnings continuity and cements STE’s position as a key MRO player with
strong OEM links. Meanwhile, signs of improved load factor in the US along
with a fall in the number of airlines under storage suggest that operational risk
has eased. The company's orderbook now stands at $10.5b, the highest
level in 10 years, but the stock is trading at a mere 0.72x price to orderbook,
implying severe margin compression. This is unlikely to be the case as
material costs have declined and MRO rates will stabilise given improving
load factors. We believe a higher PE rating is justified and accord the stock a
16.5x rating, a slightly higher band than the historical low of 14.5x. We raise
our 12-month price target to $2.83 from $2.40.
UOB Research upgrades ST Engineering to BUY with target price set at S$2.83 based on the following reasons :
1. ST Engineering (STE) announces that its aerospace division has secured
a 20-year engine maintenance programme with GE Aviation.
2. US airlines load factor improves in December and the number of aircraft
in storage tops out in October.
We have not adjusted our 2010 numbers but have accorded a higher PE
rating to the stock. The agreement with GE Aviation will provide long-term
earnings continuity and cements STE’s position as a key MRO player with
strong OEM links. Meanwhile, signs of improved load factor in the US along
with a fall in the number of airlines under storage suggest that operational risk
has eased. The company's orderbook now stands at $10.5b, the highest
level in 10 years, but the stock is trading at a mere 0.72x price to orderbook,
implying severe margin compression. This is unlikely to be the case as
material costs have declined and MRO rates will stabilise given improving
load factors. We believe a higher PE rating is justified and accord the stock a
16.5x rating, a slightly higher band than the historical low of 14.5x. We raise
our 12-month price target to $2.83 from $2.40.
Singapore share market news :
CSFB downgrades Singapore listed Epure to Neutral :
Since its trough in November 2008, Epure’s share price has risen
76% (from S$0.165) and outperformed the STI by 69%. Similarly,
against its regional water peers with exposure to the China water
sector, Epure is one of the best performers over the past three
months.
● Our S$0.28 target price remains, based on 1x forward P/B, which
translates to 6x P/E. With no potential upside from current levels,
we are downgrading Epure to NEUTRAL (from outperform). In
view of the strong outperformance, especially for a small cap
stock, investors should take profit, in our view.
● Fundamentally, we remain positive of its strong engineering
capabilities and positioning in China within the construction (EPC)
segment. Our forecasts remain unchanged and have assumed
new contracts value of Rmb1.3 bn in 2009E. Though it is in a net
cash position, we caution that Epure may intensify its strategy into
concession projects (BOT and TOT) in 2H09 and, hence,
execution success of the strategy is critical.
CSFB downgrades Singapore listed Epure to Neutral :
Since its trough in November 2008, Epure’s share price has risen
76% (from S$0.165) and outperformed the STI by 69%. Similarly,
against its regional water peers with exposure to the China water
sector, Epure is one of the best performers over the past three
months.
● Our S$0.28 target price remains, based on 1x forward P/B, which
translates to 6x P/E. With no potential upside from current levels,
we are downgrading Epure to NEUTRAL (from outperform). In
view of the strong outperformance, especially for a small cap
stock, investors should take profit, in our view.
● Fundamentally, we remain positive of its strong engineering
capabilities and positioning in China within the construction (EPC)
segment. Our forecasts remain unchanged and have assumed
new contracts value of Rmb1.3 bn in 2009E. Though it is in a net
cash position, we caution that Epure may intensify its strategy into
concession projects (BOT and TOT) in 2H09 and, hence,
execution success of the strategy is critical.
Singapore share market update :
SINOTEL CLINCHES NEW ORDER FROM CHINA UNICOM TO DEVELOP NETWORK OPTIMIZATION & BUSINESS ANALYSIS SYSTEM WORTH RMB32.8 MILLION
Singapore, 16 January, 2009 - Singapore Exchange (SGX) mainboard-listed Sinotel Technologies Limited ("Sinotel" or the "Group"), an innovator in the provision of wireless telecommunications infrastructure and solutions in the PRC, is pleased to announce that it has won the bidding for the development of a Network Optimization & Business Analysis System for China Unicom in 6 major locations, i.e. Beijing(北京), Jiangsu(江苏), Chongqing(重庆), Guangxi(广西), Hebei(河北) and Shanxi(陕西). The contract is worth a total of RMB32.8million.
The technology is a proprietary solution offered by Sinotel that will enable China Unicom to record and monitor signal strengths emitted by individual base stations. The advancement is intended to assist China Unicom to monitor and improve network coverage so that users will enjoy higher signal strength, area coverage and more consistent data transfer speeds.
Said Mr Jia Yue Ting ("贾跃亭"), Executive Chairman of Sinotel, "The Group is pleased to have won the bidding to develop this proprietary software for our partner China Unicom.
In China, the reliability and availability of network signal has always been a mobile user's top consideration when deciding on their carrier of choice. In the dawn of preparing for a 3G roll out, we are likely to see a lot more emphasis made by the telcos to enhance their networks and develop similar tools to monitor and optimize signal strengths.
The recent release of 3G licenses to telcos marked the beginning of China's 3G era and the Network Optimization & Business Analysis System will further strengthen their competitiveness in this new environment."
China officially issued 3G licenses to state run carriers China Mobile, China Telecom and China Unicom on 7 January, 2009, igniting a race between the telcos to speed up 3G upgrading works and be first to secure market dominance in the world's largest population of mobile users.
SINOTEL CLINCHES NEW ORDER FROM CHINA UNICOM TO DEVELOP NETWORK OPTIMIZATION & BUSINESS ANALYSIS SYSTEM WORTH RMB32.8 MILLION
Singapore, 16 January, 2009 - Singapore Exchange (SGX) mainboard-listed Sinotel Technologies Limited ("Sinotel" or the "Group"), an innovator in the provision of wireless telecommunications infrastructure and solutions in the PRC, is pleased to announce that it has won the bidding for the development of a Network Optimization & Business Analysis System for China Unicom in 6 major locations, i.e. Beijing(北京), Jiangsu(江苏), Chongqing(重庆), Guangxi(广西), Hebei(河北) and Shanxi(陕西). The contract is worth a total of RMB32.8million.
The technology is a proprietary solution offered by Sinotel that will enable China Unicom to record and monitor signal strengths emitted by individual base stations. The advancement is intended to assist China Unicom to monitor and improve network coverage so that users will enjoy higher signal strength, area coverage and more consistent data transfer speeds.
Said Mr Jia Yue Ting ("贾跃亭"), Executive Chairman of Sinotel, "The Group is pleased to have won the bidding to develop this proprietary software for our partner China Unicom.
In China, the reliability and availability of network signal has always been a mobile user's top consideration when deciding on their carrier of choice. In the dawn of preparing for a 3G roll out, we are likely to see a lot more emphasis made by the telcos to enhance their networks and develop similar tools to monitor and optimize signal strengths.
The recent release of 3G licenses to telcos marked the beginning of China's 3G era and the Network Optimization & Business Analysis System will further strengthen their competitiveness in this new environment."
China officially issued 3G licenses to state run carriers China Mobile, China Telecom and China Unicom on 7 January, 2009, igniting a race between the telcos to speed up 3G upgrading works and be first to secure market dominance in the world's largest population of mobile users.
Tuesday, January 13, 2009
Singapore share market update :
DBS downgrades singapore listed S-chip China XLX to FULLY VALUED (Bloomberg Code: CXLX SP) Price Target : 12-Month S$ 0.33
DBS comments :
DBS expects China XLX to report weak 4Q08 earnings, plunging 50% qoq and 33% yoy to c. RMB50m. This comes on the back of 30%-40% fall in ASP, which affects the profitability of compound fertilizer and methanol segments. Looking into 2009, the consolidation phase is likely to be accelerated and margin contraction is expected in the transition. The share price has performed well and is now trading above our valuation. Downgrade to Fully Valued.
Outlook in 2009 = Consolidation + Margin Contraction
The urea sector in China is expected to accelerate its consolidation and increase industry concentration in 2009. Given most of the small players are operating at losses currently, many of them are likely to be phased out in the next 6-12months. Meanwhile, margins for urea producers will be compressed in the transition. We expect big players to garner 15%-25% of gross margins vs 30%-40% in 1Q06 to 2Q08, assuming urea prices hover around RMB1600-1650/ton and coal prices about RMb900-1000/ton.
Valuation appears relatively rich
Our TP is maintained at S$0.33. We have cut FY09 and FY10 earnings by 23% each year but have raised valuation peg to 7.0x (vs 5.0x previously) FY09 PEs. This is in line with a 30% discount to global peers average valuation. We also believe that CXLX would benefit from the accelerated consolidation in the longer term. However, current valuation appears stretched at 8.2x 09PE, relative to its global peers as well as other S chips. With the lacking of near term catalyst, we downgrade the stock to Fully Valued.
DBS downgrades singapore listed S-chip China XLX to FULLY VALUED (Bloomberg Code: CXLX SP) Price Target : 12-Month S$ 0.33
DBS comments :
DBS expects China XLX to report weak 4Q08 earnings, plunging 50% qoq and 33% yoy to c. RMB50m. This comes on the back of 30%-40% fall in ASP, which affects the profitability of compound fertilizer and methanol segments. Looking into 2009, the consolidation phase is likely to be accelerated and margin contraction is expected in the transition. The share price has performed well and is now trading above our valuation. Downgrade to Fully Valued.
Outlook in 2009 = Consolidation + Margin Contraction
The urea sector in China is expected to accelerate its consolidation and increase industry concentration in 2009. Given most of the small players are operating at losses currently, many of them are likely to be phased out in the next 6-12months. Meanwhile, margins for urea producers will be compressed in the transition. We expect big players to garner 15%-25% of gross margins vs 30%-40% in 1Q06 to 2Q08, assuming urea prices hover around RMB1600-1650/ton and coal prices about RMb900-1000/ton.
Valuation appears relatively rich
Our TP is maintained at S$0.33. We have cut FY09 and FY10 earnings by 23% each year but have raised valuation peg to 7.0x (vs 5.0x previously) FY09 PEs. This is in line with a 30% discount to global peers average valuation. We also believe that CXLX would benefit from the accelerated consolidation in the longer term. However, current valuation appears stretched at 8.2x 09PE, relative to its global peers as well as other S chips. With the lacking of near term catalyst, we downgrade the stock to Fully Valued.
Friday, January 09, 2009
Singapore stock market update
Macquarie remains Bearish on Singapore listed Cosco :
Event
Order cancellation and deferrals over the past month will result in delayed
profit recognition, affecting COSCO’s DCF-derived valuation. We are also
concerned about the possibility of balance sheet write-downs, which we
suspect is behind the company’s profit warning. We therefore lower our target
price from S$0.69 to S$0.65, while retaining our Underperform rating.
Impact
Order cancellations and deferrals have begun: Two orders have been
cancelled and a further ten have been deferred; incidentally this is equivalent
to the sum-total of all shipbuilding orders won by COSCO in 2008. That the
affected orders were all won in mid-2007 is all the more alarming given that
orders placed in 2008 would be less expensive to cancel for COSCO’s clients.
We expect further cancellations and/or deferrals through the remainder of
2009.
Balance sheet write-downs expected: As steel plate and ship engine prices
have come off over the past two quarters, COSCO will be forced to mark to
market its inventory. Given prices have dropped 30–40%, we estimate a writedown
of S$118m, which would lead to a 27% drop in net profits vs. 2007. We
suspect this is the main reason behind COSCO’s profit warning on 30
December 2008.
Valuation not compelling yet: Assuming the write-down, the stock is trading
at 8.6x FY08, with marginal growth in FY09; this suggests the stock is still
expensive. Even without any write-down, the stock is trading at 6.7x FY08,
with negative earnings growth likely over the next year, not to mention a
significant drop in newbuilding order wins.
Earnings revision
FY08E and FY09E EPS have been reduced by 18.7% and 8.2%, respectively,
while FY10 EPS has been raised by 29.9% to reflect deferred profit
recognition.
12-month price target: S$0.65 based on a DCF methodology.
Macquarie remains Bearish on Singapore listed Cosco :
Event
Order cancellation and deferrals over the past month will result in delayed
profit recognition, affecting COSCO’s DCF-derived valuation. We are also
concerned about the possibility of balance sheet write-downs, which we
suspect is behind the company’s profit warning. We therefore lower our target
price from S$0.69 to S$0.65, while retaining our Underperform rating.
Impact
Order cancellations and deferrals have begun: Two orders have been
cancelled and a further ten have been deferred; incidentally this is equivalent
to the sum-total of all shipbuilding orders won by COSCO in 2008. That the
affected orders were all won in mid-2007 is all the more alarming given that
orders placed in 2008 would be less expensive to cancel for COSCO’s clients.
We expect further cancellations and/or deferrals through the remainder of
2009.
Balance sheet write-downs expected: As steel plate and ship engine prices
have come off over the past two quarters, COSCO will be forced to mark to
market its inventory. Given prices have dropped 30–40%, we estimate a writedown
of S$118m, which would lead to a 27% drop in net profits vs. 2007. We
suspect this is the main reason behind COSCO’s profit warning on 30
December 2008.
Valuation not compelling yet: Assuming the write-down, the stock is trading
at 8.6x FY08, with marginal growth in FY09; this suggests the stock is still
expensive. Even without any write-down, the stock is trading at 6.7x FY08,
with negative earnings growth likely over the next year, not to mention a
significant drop in newbuilding order wins.
Earnings revision
FY08E and FY09E EPS have been reduced by 18.7% and 8.2%, respectively,
while FY10 EPS has been raised by 29.9% to reflect deferred profit
recognition.
12-month price target: S$0.65 based on a DCF methodology.
Singapore stock market update
DBS comments on Raffles Education :
Post our conference, we are more confident that management will be able to convert part of the upcoming installment for OUC (Oriental University City) to interest bearing loan. This should re-instill confidence on the counter and boost share price. Student enrollment remains firm. Reiterate Buy, TP: S$0.80.
Scrip Dividend Scheme should be approved. Raffles Ed’s management representative appears confident that the proposed SDS to be put before shareholders’ approval on 12 Jan 09 will be approved. The SDS provides alternative to shareholders to opt for cash or scrip. Investment banks
and/or strategic investors will underwrite un-subscribed scrips.
Operations stable. Management shared that they have not witnessed any significant impact to operations and student enrollment continues to trend well. While they have seen some rise in private students asking for payment
of fees in installment, management indicates that the proportion is insignificant to total student population. 1H09 results will be released on 5 Feb.
DBS comments on Raffles Education :
Post our conference, we are more confident that management will be able to convert part of the upcoming installment for OUC (Oriental University City) to interest bearing loan. This should re-instill confidence on the counter and boost share price. Student enrollment remains firm. Reiterate Buy, TP: S$0.80.
Scrip Dividend Scheme should be approved. Raffles Ed’s management representative appears confident that the proposed SDS to be put before shareholders’ approval on 12 Jan 09 will be approved. The SDS provides alternative to shareholders to opt for cash or scrip. Investment banks
and/or strategic investors will underwrite un-subscribed scrips.
Operations stable. Management shared that they have not witnessed any significant impact to operations and student enrollment continues to trend well. While they have seen some rise in private students asking for payment
of fees in installment, management indicates that the proportion is insignificant to total student population. 1H09 results will be released on 5 Feb.
Subscribe to:
Posts (Atom)
Posts
