Asean Plantation: JP Morgan has 2H11/2012 outlook report. House top picks are IndoAgri (TP $3.00) & Sime. Add that CPO prices have fallen by up to 16% from a high of Rm$3,927/t in Jan-11 with the anticipated production pick-up this yr (mainly in 2H11). House sees any significant weakness in share prices from here as a buying opportunity……
Maintain CPO forecast at Rm$3,400/t for 2011 and Rm$3,200/t for 2012. Tip weather risks and positive soy-oil outlook to also provide support, with possible capital management/M&A an emerging theme in the next 12-24 mths. House also remains O/w on First Resources, Mewah and London Sumatra. Key U/w in the sector is Genting Plantations.
Wednesday, June 1, 2011
Otto Marine
Otto Marine: Formally announced that Mosvold Supply has terminated the contract for construction of Builders Hull No. 7048 and demand refund of all advance payments amounting to US$26.7m. While transactions not expected to have impact on NTA and EPS for FY11, we note that news could still weigh on stock, whose share price has been struggling in recent mths, over lack of order wins due to industry excess supply for OSVs. Technically, see support at $0.21 followed by $0.195.
China Minzhong
China Minzhong: Could see some interests after grp added new facilities which will double its king oyster mushrooms to the existing capacity, bringing total capacity to 8 tons/day. King Oysters’ are able to fetch higher ASP’s and gross margins vs other mushrooms. Co. targets to increase its total king oyster mushroom cultivation capacity to 15 tons/day by FY11 and 24 tons/day by FY12…..
Separately, Olympus who sold recently stakes in the Co. announced along with board representatives from GIC and CMIA that they continue to express confidence in China Minzhong's prospects. Add that firm have been divesting stakes slowly not because they’re not optimistic, but because as a fund, they have a certain fund life and some of the earlier funds managed are approaching the end of their fund life, so firm do have to divest….
JPM maintain O/w, note that outlook remains favorable with vegetable prices remaining on a structural uptrend.
Separately, Olympus who sold recently stakes in the Co. announced along with board representatives from GIC and CMIA that they continue to express confidence in China Minzhong's prospects. Add that firm have been divesting stakes slowly not because they’re not optimistic, but because as a fund, they have a certain fund life and some of the earlier funds managed are approaching the end of their fund life, so firm do have to divest….
JPM maintain O/w, note that outlook remains favorable with vegetable prices remaining on a structural uptrend.
Yongnam
Yongnam: Secures HK$300m ($49m) worth of specialist civil engineering sub-contracts for the HK Section of the Express Rail Link. Scope of works will include the design, supply and installation of strut and waling for cofferdam excavation and subsequent dismantling for the Tai Kong Po to Tse Uk Tsuen Tunnels. Project could pave way for other future projects into HK for grp……
Contracts are expected to have a favorable impact on Grp’s financial performance for FY11. We note that current orderbook stands now at apprx $459m, underpinning earnings till 2012. At current price valuation appears compelling, with grp trading at 5.3x FY11E P/E vs peers average of 12.9x. Street has a unanimous Buy call on grp with $0.41 TP.
Contracts are expected to have a favorable impact on Grp’s financial performance for FY11. We note that current orderbook stands now at apprx $459m, underpinning earnings till 2012. At current price valuation appears compelling, with grp trading at 5.3x FY11E P/E vs peers average of 12.9x. Street has a unanimous Buy call on grp with $0.41 TP.
Genting HK
Genting HK: media rpts say Travellers Int’l (owner of Resorts World Manila) could be planning an IPO of US$0.5-1b. GENHK, as a 50% sh/h of Travellers, could see significant value unlocking if the IPO goes through. Travellers, which is said to be in process of hiring banks for the deal, may also carry out a dual-listing in Spore and the Philippines.
Recall GENHK also owns 50% stake in Norwegian Cruise Lines (NCL), and that has also been slated for IPO in the US over the 6 mths...
Macquarie estimates Travellers to be worth US$0.18/sh to GENHK (based on casino peer avg 12x EV/EBITDA), and NCL to be worth another US$0.18/sh (based on cruise peer avg of 10x EV/EBITDA). With the Macau land and laid-up ships valued at US$0.04/sh, this implies Star Cruises, valued at US$0.16/sh, comes free.
House reiterates Outperform with US$0.56 TP, says value unlocking from both IPOs could lead to significant re-rating of the stock.
Recall GENHK also owns 50% stake in Norwegian Cruise Lines (NCL), and that has also been slated for IPO in the US over the 6 mths...
Macquarie estimates Travellers to be worth US$0.18/sh to GENHK (based on casino peer avg 12x EV/EBITDA), and NCL to be worth another US$0.18/sh (based on cruise peer avg of 10x EV/EBITDA). With the Macau land and laid-up ships valued at US$0.04/sh, this implies Star Cruises, valued at US$0.16/sh, comes free.
House reiterates Outperform with US$0.56 TP, says value unlocking from both IPOs could lead to significant re-rating of the stock.
Wilmar
Wilmar: may get lift on market talk that edible oil companies in China may apply to raise prices, after a 2-month order to impose a price ceiling expires in early Jun.
Recall Wilmar’s share price weakness has been partially attributed to China’s price controls on cooking oil, and has been responsible for weaker segment margins over the last 2 quarters. The segment accounts for ~8% of Group PBT...
The top 2 players, COFCO and Wilmar, control over half of the small-pack consumer oil market.
News may also be positive for HK-listed Want Want and Tingyi, which were denied price hikes for their consumer pdts back in Apr.
Recall Wilmar’s share price weakness has been partially attributed to China’s price controls on cooking oil, and has been responsible for weaker segment margins over the last 2 quarters. The segment accounts for ~8% of Group PBT...
The top 2 players, COFCO and Wilmar, control over half of the small-pack consumer oil market.
News may also be positive for HK-listed Want Want and Tingyi, which were denied price hikes for their consumer pdts back in Apr.
SG Market
SG Market: Spore shares may open higher tracking gains on Wall Street as market sentiment regains some momentum. However, gains are likely to be limited after 6 straight sessions of gains & lingering worries about euro-zone debt troubles. For the moment, euro zone debt problems, the end of QE2 & a global slowdown will weigh on the market outlook till Jul/Aug.
Capitaland, CapitaMalls Asia & CapitaMall Trust will be in focus on news that they will jointly develop a $1.5b mixed commercial site, including offices and a shopping mall. A break of resistance at 3170 make take the STI to 3200.
Capitaland, CapitaMalls Asia & CapitaMall Trust will be in focus on news that they will jointly develop a $1.5b mixed commercial site, including offices and a shopping mall. A break of resistance at 3170 make take the STI to 3200.
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