Golden Agri: IIFL initiate with Add and TP $0.79. House add that Co. on the path to produce sustainable oil expect Co. to deliver a modest 5-6% production CAGR over FY11-20. GGR is the most liquid proxy to CPO prices, with a correlation of 0.9 since 2008.
If CPO prices appreciate by 5% annually in the long term and yield profile of the palm plantation improves, discounted cash flow model suggests a fair value of $0.79 (12.2x FY12 P/E).
Tuesday, September 20, 2011
CMA
CMA: Nomura reiterate Buy Call but reduces TP to $1.69 from $2.23. Add that more transaction benchmarks could start to narrow discount to book. Believe the 17.3% discount to FY12F book at which the stock is trading may be overly conservative.
Expect potential near-term catalysts to narrow discount to book include:
1) more transaction benchmarks as developers deploy capital for acquisitions in
China; and
2) higher-than-expected dividend payout for the full year.
House cut earnings forecast by an average 20.7% to chiefly reflect the latest completion schedule of CMA’s malls in China and SG; higher pre-op expenses and the acquisition of additional stakes in the Shanghai malls; and revised earnings for CMT.
Expect potential near-term catalysts to narrow discount to book include:
1) more transaction benchmarks as developers deploy capital for acquisitions in
China; and
2) higher-than-expected dividend payout for the full year.
House cut earnings forecast by an average 20.7% to chiefly reflect the latest completion schedule of CMA’s malls in China and SG; higher pre-op expenses and the acquisition of additional stakes in the Shanghai malls; and revised earnings for CMT.
SG O&M
SG O&M: CS has sector report. Note that valuations more attractive, but downside risks remain. While valuations have come down from recent peaks, believe that they are not sufficiently attractive to be positive on the entire sector given macron uncertainty and a tightening of credit. believe earnings are increasingly at risk with a potential slowdown in orders.
Believe most stocks are pricing in a mild-2001 type US recession on a P/B basis. House has downgraded Sembcorp Marine and STX OSV to NEUTRAL and believe they have the largest risks to orders and earnings expectations. Remain comfortable on stocks close to meeting order expectations or are close to trough valuations, including O/p-rated Keppel (top pick), Sembcorp Industries and Yangzijiang. Cosco Corp (U/p) remains as least preferred.
Believe most stocks are pricing in a mild-2001 type US recession on a P/B basis. House has downgraded Sembcorp Marine and STX OSV to NEUTRAL and believe they have the largest risks to orders and earnings expectations. Remain comfortable on stocks close to meeting order expectations or are close to trough valuations, including O/p-rated Keppel (top pick), Sembcorp Industries and Yangzijiang. Cosco Corp (U/p) remains as least preferred.
Fortis
Fortis: Fortis Healthcare India has announced that is will acquire Fortis Healthcare Intl headquartered in Singapore also may consider a listing on SGX. With the recent acquisition, Fortis India will form a network of over 74 hospitals with over 12k beds and 23k employees with a rev of over US$1b.
BakerTech
BakerTech: Accounting treatment of 15% indirect stake in PPL Shipyard now in focus. The point of contention is whether a JV agreement signed in 2001 is still in force. This affects the expected cash payout to co’s sh/h after the sale of its PPL stake for $116.3m to a consortium which includes Yangzijiang. As of yet, the issue has not been resolved.
Both SembMarine and former shareholder PPLH enjoyed equal board representation and voting rights but SembMarine has argued that the 50-50 voting split was moot after it increased its stake to 85% in 2003. On BakerTech’s books, the accounting treatment of PPL Shipyard changed from an “available-for-sale” asset to a JV in 2010 after legal proceedings commenced which affect the way BakerTech views PPL Shipyard in terms of ownership
Both SembMarine and former shareholder PPLH enjoyed equal board representation and voting rights but SembMarine has argued that the 50-50 voting split was moot after it increased its stake to 85% in 2003. On BakerTech’s books, the accounting treatment of PPL Shipyard changed from an “available-for-sale” asset to a JV in 2010 after legal proceedings commenced which affect the way BakerTech views PPL Shipyard in terms of ownership
GLP
GLP: To establish a JV partnership where GLP will own a 60% stake in Zhejiang Transfar Logistics Base. The JV will own 3 assets that are masterleased to the operator of Transfar Road-Ports. Going forward, GLP will develop and operate logistics parks adjacent to future road port projects providing a total solution platform for customers.
Transfar Road-Port currently owns the three operational road ports projects in Hangzhou, Suzhou and 75% of a Chengdu project with a total NLA of 951.3k sqm. Co is of view that it has the option to convert these assets to warehouse facilities if necessary. Roads remain the main medium of freight transportation with 77% mkt share.
What are road ports? Apparently a port for trucks with logistics facilities.
http://www.etransfar.com/en/business/logistics.html (http://www.etransfar.com/en/business/logistics.html%3C/a%3E%3C/i%3E%3C/b%3E%3Cb%3E%3Ci%3E)
Transfar Road-Port currently owns the three operational road ports projects in Hangzhou, Suzhou and 75% of a Chengdu project with a total NLA of 951.3k sqm. Co is of view that it has the option to convert these assets to warehouse facilities if necessary. Roads remain the main medium of freight transportation with 77% mkt share.
What are road ports? Apparently a port for trucks with logistics facilities.
http://www.etransfar.com/en/business/logistics.html (http://www.etransfar.com/en/business/logistics.html%3C/a%3E%3C/i%3E%3C/b%3E%3Cb%3E%3Ci%3E)
Lian Beng
Lian Beng: Proposed to spin off 90% owned subsi Sinmix and wholly-owned subsi Lian Beng Engrg & Machinery (engrg & concrete business) on a primary listing on Taiwan Stock Exchange. Approval sought by EGM and SGX. If Lian Beng does successfully list on TSE and depending on the valuations, other construction counters such as KSH, BBR, Chip Eng Seng, Lum Chang and others may get a boost and consider secondary listings on TSE. The industry generally trades at an historical avg of 6.0x.
DMG notes that co trades at 3.4x fwd P/E and may have capacity to trade up to the sector avg of 7x, maintains Buy for TP$0.71. Taiwanese concrete peers trade at an current avg P/E of 12.9x and construction/engineering at 7.8x. Positive include strong orderbook as of May 11 of $839m and track record of project wins.
Listing is expected to provide greater clarity for financial institutions to lend to engrg and concrete business.
DMG notes that co trades at 3.4x fwd P/E and may have capacity to trade up to the sector avg of 7x, maintains Buy for TP$0.71. Taiwanese concrete peers trade at an current avg P/E of 12.9x and construction/engineering at 7.8x. Positive include strong orderbook as of May 11 of $839m and track record of project wins.
Listing is expected to provide greater clarity for financial institutions to lend to engrg and concrete business.
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