Cosco: 51% owned subsi Cosco Shipyard has secured 3 orders and 1 option to build USD113m worth of special purpose carriers. The 3 orders are scheduled for delivery btwn Feb 2013 and Feb 2014. Option will expire by end of June 2011. More on Chinese shipbuilders in Deutsche report.
Chinese Shipbuilding: Deutsche issue report noting healthy enquiries for containership and expects firm demand driven by positive macro outlook and relatively manageable global order book, 25% of total fleet below average of 32% in 1995-2010. Top picks include Buy, YZJ TP$1.90, Cosco TP$2.15 and HK counter China Rongsheng TP HK$7.45...
YZJ has indicated enquiries for dry bulk remain healthy despite falling Baltic rates, mainly from Chinese customers who wish to reduce reliance on charterers. Consolidation is expected in shipyard space due to recent order cancellations at smaller yards and re-ordering at larger yards. House also expects a stronger economy to lift sentiments of vessel owners and flow down to pricing power on end of shipyards…
On additional news, BDI rose to a 3-wk high on demand to transport S.American cargoes, advancing 30 pts (+2.5%) gaining for a 7th day.
Wednesday, February 16, 2011
UnitedEng
UnitedEng: Launch of IPO of UE E&C following today's registration at MAS of prospectus dated 15 Feb 2011. Offering will consist of 70m new shares at $0.48 per share, 60m of which will be offered to institutions and private individuals, the remaining 10m will be offered to the public. A greenshoe option of 10.5m shares, approx 15.0% of the offering, can be exercised if necessary…
The offering will be handled by OCBC, the underwriter and stabiliser of this IPO. Size of offering is approx $38.6m including the option and mkt cap of UE E&C will be approx $134.6m. Co will retain a majority stake of 68.2% post-listing, and 65.6% if option is exercised. The IPO opens on 16 Feb 9am and closes on 22 Feb 12 noon.
The offering will be handled by OCBC, the underwriter and stabiliser of this IPO. Size of offering is approx $38.6m including the option and mkt cap of UE E&C will be approx $134.6m. Co will retain a majority stake of 68.2% post-listing, and 65.6% if option is exercised. The IPO opens on 16 Feb 9am and closes on 22 Feb 12 noon.
Tiger Airways
Tiger Airways: Citi maintain Buy with New TP of $2.15. Note that house continue to like grp as it sees its well-executed business model (in terms of cost control and profit generation) leveraging on the multi-year structural demand growth in LCC traffic. Tiger is also an under-recognized proxy to the strong tourist arrivals into Singapore, mainly driven by the Integrated Resorts….
However, lower FY11-12E EPS by 9-11% and TP on higher fuel costs, note that Tiger may be able to pass s costs by raising ticket prices or increasing ancillary rev. While headwinds exist, believe there is little threat that Tiger may not find opportunities to deploy growing fleet. See grp as best positioned LCC to weather rising fuel costs, as passengers are less price sensitive....
While grp has no plans to implement a fuel surcharge, believe it has started to build higher base fares into its dynamic pricing structure to partially offset costs.
However, lower FY11-12E EPS by 9-11% and TP on higher fuel costs, note that Tiger may be able to pass s costs by raising ticket prices or increasing ancillary rev. While headwinds exist, believe there is little threat that Tiger may not find opportunities to deploy growing fleet. See grp as best positioned LCC to weather rising fuel costs, as passengers are less price sensitive....
While grp has no plans to implement a fuel surcharge, believe it has started to build higher base fares into its dynamic pricing structure to partially offset costs.
Midas
Midas: Nomura downgrade Midas Holdings to ‘Neutral’ from ‘Buy’, and reduces TP HK$5.90/S$0.97 from HK$7.20/S$1.18, noting that Co’s future growth is at risk amid the uncertainties in China’s high-speed railway development…
House view that recent Railway news is purely negative for the whole railway sector, as minister has been extremely bullish on China high-speed railway construction during his tenure. While already started projects are not likely to be terminated and train procurement orders are unlikely to be withdrawn, long-term railway development now faces more policy risks, which could cause a shrinkage in PE multiples for the whole sector.
House view that recent Railway news is purely negative for the whole railway sector, as minister has been extremely bullish on China high-speed railway construction during his tenure. While already started projects are not likely to be terminated and train procurement orders are unlikely to be withdrawn, long-term railway development now faces more policy risks, which could cause a shrinkage in PE multiples for the whole sector.
Viking OffShore
Viking OffShore: Announced FY10 results, which were in-line, with Rev at $79.9m, +112%YoY, while Net profit at $12.7m, +1,169%YoY. Sterling performance was due largely to full-year contributions frm grp’s wholly owned Viking Airtech, a Heating, Ventilation, Air-Conditioning & Refrigeration systems specialist, which was acquired in Jan10, while Gross profit margin rose to 32% vs 19% YoY....
In addition, Grp consolidated 4.5 mths and 1 mth of earnings, respectively, from two newly acquired businesses, Promoter Hydraulics Distributor and Marshal Systems, where both were acquired in FY10, and grp notes that it now offers a fairly comprehensive suite of O&M products and services to customers....
Going forward, grp’s nxt stage of growth will be centred on the integration of its various business units to achieve economies of scale and enhance opportunities to cross-market to customers and expand into new markets. Grp remains confident on its unique value proposition as a one-stop solutions provider and is confident in standing out against competition to capture additional market share in FY11....
Current orderbook stands at approximately $39m vs $27m YoY, with management tipping sustainability on back of higher crude oil prices, growing demand in the O&M sector in general and the results of aggressive expansion in recent months to new markets such as Vietnam. At current price, valuations appear compelling, with grp trading at 9x FY10 PE vs its historical average of 18x
In addition, Grp consolidated 4.5 mths and 1 mth of earnings, respectively, from two newly acquired businesses, Promoter Hydraulics Distributor and Marshal Systems, where both were acquired in FY10, and grp notes that it now offers a fairly comprehensive suite of O&M products and services to customers....
Going forward, grp’s nxt stage of growth will be centred on the integration of its various business units to achieve economies of scale and enhance opportunities to cross-market to customers and expand into new markets. Grp remains confident on its unique value proposition as a one-stop solutions provider and is confident in standing out against competition to capture additional market share in FY11....
Current orderbook stands at approximately $39m vs $27m YoY, with management tipping sustainability on back of higher crude oil prices, growing demand in the O&M sector in general and the results of aggressive expansion in recent months to new markets such as Vietnam. At current price, valuations appear compelling, with grp trading at 9x FY10 PE vs its historical average of 18x
China MinZhong
China MinZhong: DBSV maintains Buy, but raises TP to $1.80 from $1.60. Note that grp’s 2Q results In line with consensus, driven by the processing segment which grew by 53% on the back of 31% increase in sales volumes and 17% higher ASP. Delivering value to shareholders. Management has basically executed well and that has reinforced house confidence in management’s competence to deliver growth over the next three to five years….
Growth plans include doubling of cultivation farmland in two years’ time, expanding vegetable processing capacities and selling higher priced vegetables. Believe that grp will be minimally impacted by food inflation. Prospects are positive and has prompted house to upgrade FY11F/FY12F by 13%/10%, pegging it at 9x CY11F PE compared to peers’ average of 14.2x.
Growth plans include doubling of cultivation farmland in two years’ time, expanding vegetable processing capacities and selling higher priced vegetables. Believe that grp will be minimally impacted by food inflation. Prospects are positive and has prompted house to upgrade FY11F/FY12F by 13%/10%, pegging it at 9x CY11F PE compared to peers’ average of 14.2x.
OCBC
OCBC: GEH’s weaker 4Q results means analysts have to adjust their forecast for OCBC’s 4Q net profit down by ~10%. Still, this may be less of a concern, given the strong underlying business trends at GE. The upstreaming of cash to OCBC is also a positive, and may help improve its capital adequacy ratios, which under Basel III, can be rather punitive for OCBC.
OCBC’s results due 18 Feb.
OCBC’s results due 18 Feb.
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