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.
Wednesday, February 16, 2011
Great Eastern
Great Eastern: 4Q10 results. Weak headline numbers, but underlying results good. Net profit of $85.1m halved qoq, as invmt returns were impacted by the spike in yield curves in Nov. But new sales grew 25% qoq to $237m, driven by increased regular premium sales in both Spore and Msia…
Market also likely to welcome the $0.77/sh cash capital distribution, which brings total FY10 payout to $0.87/sh (5.5% yield), more than double FY09’s $0.40/sh. This will help lift ROE performance going forward.
Citi upgrades to Buy, raises TP to $17.70 from $15.70.
Market also likely to welcome the $0.77/sh cash capital distribution, which brings total FY10 payout to $0.87/sh (5.5% yield), more than double FY09’s $0.40/sh. This will help lift ROE performance going forward.
Citi upgrades to Buy, raises TP to $17.70 from $15.70.
ST Eng
ST Eng: Stable results largely in line with expectations. FY2010 Rev at $6.0b +7.9%yoy and profit of $491.0m +10.6%yoy. Profit was also boosted by an accounting policy change resulting in a decrease of $39.5m in depreciation charges. Of the 4 segments, rev growth was from Land Systems and Marine sectors while Aerospace and Electronics revenues were comparable to prev yr, profit was up more than 10% for all segments…
Higher shipbuilding and ship repair were main contributors to Marine, and Land Systems benefitted from its automotive and service & trading divisions. Co expects rev for Aerospace to remain stable and rev to increase for other businesses, all segments' profit to continue to increase in FY2011…
Order book at hefty $11.5b compared to 2009 at $10.3b with mix of contracts in all 4 segments. Dividend of 11.55c per share declared, tgt with prev interim of 3.00c in Sept translates to a 4.62% div yield based on last traded price. Current P/E 19.44x is close to hist avg of 19.66x…
Deutsche maintains Buy with TP at $3.95 citing deeper involvement with US military and positive prospects, and Citi maintains Buy with TP at $3.80 also likes div payout at 90%, and growth outlook. DBS maintains Buy with TP at $3.85.
Higher shipbuilding and ship repair were main contributors to Marine, and Land Systems benefitted from its automotive and service & trading divisions. Co expects rev for Aerospace to remain stable and rev to increase for other businesses, all segments' profit to continue to increase in FY2011…
Order book at hefty $11.5b compared to 2009 at $10.3b with mix of contracts in all 4 segments. Dividend of 11.55c per share declared, tgt with prev interim of 3.00c in Sept translates to a 4.62% div yield based on last traded price. Current P/E 19.44x is close to hist avg of 19.66x…
Deutsche maintains Buy with TP at $3.95 citing deeper involvement with US military and positive prospects, and Citi maintains Buy with TP at $3.80 also likes div payout at 90%, and growth outlook. DBS maintains Buy with TP at $3.85.
Keppel Corp
Keppel Corp: extends recent order momentum; wins US$1b (S$1.25b) order for 2 harsh environment jackups (Gusto CJ70), that comes with 1 additional option (unknown jackup specs). The rigs, expected to be delivered in 4Q13 and 3Q14 rptively, are especially suited for operation in the North Sea...
Ytd, Keppel has garnered new orders of ~S$3.2b, and has options to build another 12 rigs worth about the same amount. At current run rates, Keppel appears on track to hit Street forecasts for FY11 new orders of S$5.1 - 7.0 b. This compares to the record S$7.4b worth of orders that Keppel won in FY07...
Also, the latest order reverts to the traditional milestone payments instead of the recent 20/80 terms. The improving yard payment terms may be a sign of potential rig pricing hikes. Meanwhile, analyst channel checks indicate more orders ahead for Keppel, though the pace of order wins may slow in the near-term. Recall Maersk previously indicated it aims to order a new rig every 6mths, and has a long term target to double its fleet from the current 26 rigs...
The Street unanimously reiterates Buy call. Goldman raises TP to $14 from $13.50.
Ytd, Keppel has garnered new orders of ~S$3.2b, and has options to build another 12 rigs worth about the same amount. At current run rates, Keppel appears on track to hit Street forecasts for FY11 new orders of S$5.1 - 7.0 b. This compares to the record S$7.4b worth of orders that Keppel won in FY07...
Also, the latest order reverts to the traditional milestone payments instead of the recent 20/80 terms. The improving yard payment terms may be a sign of potential rig pricing hikes. Meanwhile, analyst channel checks indicate more orders ahead for Keppel, though the pace of order wins may slow in the near-term. Recall Maersk previously indicated it aims to order a new rig every 6mths, and has a long term target to double its fleet from the current 26 rigs...
The Street unanimously reiterates Buy call. Goldman raises TP to $14 from $13.50.
SG Market
SG Market: Spore shares may see a soft opening following Wall Street’s pullback & concerns over the escalating uprisings in Mid-East but selective stocks may be supported by positive newsflow & bargain hunting after falls for STI in 6 of the last 7 sessions could limit declines. From a technical stand point, it seems like the downward trend is set to continue with MACD & stochastic hitting new lows in the oversold region. A breach below 3040 would indicate a downside target of 2920.
Keppel Corp expected to get a boost from US$1b contract to build 2 harsh environment rigs for Maersk, bringing ytd orders secured to $3.2b. ST Engrg also posted slightly better 4Q results and raised its dividends to offer an attractive 4.6% yield. GE may also be in focus after announcing $0.77 per share capital distribution. Nomura downgraded Midas to Neutral with TP of $0.97.
Keppel Corp expected to get a boost from US$1b contract to build 2 harsh environment rigs for Maersk, bringing ytd orders secured to $3.2b. ST Engrg also posted slightly better 4Q results and raised its dividends to offer an attractive 4.6% yield. GE may also be in focus after announcing $0.77 per share capital distribution. Nomura downgraded Midas to Neutral with TP of $0.97.
Tuesday, February 15, 2011
Qingmei
Qingmei: 2QFYJun11 results brief yday. Hosted by CFO Nelson AuYong.
At 3.1x trailing P/E, 8.2% historical div yield, this stock may appeal to longer term investors looking for cheap valuations and decent dividends. It is however, in the not-so-sexy business of producing sports shoe soles. Catalyst for re-rating may transpire closer toward end of 2QCY11, when capacity (and volume) ramp up becomes more meaningful.
Stock last closed at $0.275.
Key takeaways as follows.
On pdtn capacity, Ramp up may be slower than what the mkt hoped for, due to the Chinese New Year holidays, and sourcing of labor. Mgt expects to achieve 10% utilization on the new capacity (+19m shoe soles) by Mar ’11, and 50% utilization by Jun ’11. Thereafter, Qingmei will proceed with Phase 2 expansion to increase installed capacity by another 19m shoe soles.
On the bright side, mgt is confident of deploying the new capacity, as it comes on stream, due to strong customer demand.
On ASP, 2Q11 saw a 5% yoy decline in ASP to Rmb 25.7, due to shift in demand toward shoes with less functionality (eg. non-slip, high performance) and better aesthetic design. The ASP decline may persist, as China consumer trends shift away from sports shoes toward fashion shoes.
On raw material cost, Some increases expected, but mgt just contracted for them, and the higher cost should be manageable. Main raw materials are synthetic rubber, and EVA (ethylene vinyl acetate).
On dividends, Minimum 30% payout policy.
On customers, Pretty diversified customer base comprising of local brands. Added 2 more clients in the latest quarter, bringing total no. of clients to 88. Xtep is the largest contributor at >15% of sales.
Key uncertainties,
Mgt is concerned about being able to hire sufficient workers, especially after the minimum wage increase (now ~Rmb 1000/mth in Jinjiang, Fujian) prompted more competition for manpower. Then again, a back-of-envelop calculation suggests Qingmei’s avg salary per worker is ~Rmb 4000/mth. Mgt was unable to explain the disconnect.
At 3.1x trailing P/E, 8.2% historical div yield, this stock may appeal to longer term investors looking for cheap valuations and decent dividends. It is however, in the not-so-sexy business of producing sports shoe soles. Catalyst for re-rating may transpire closer toward end of 2QCY11, when capacity (and volume) ramp up becomes more meaningful.
Stock last closed at $0.275.
Key takeaways as follows.
On pdtn capacity, Ramp up may be slower than what the mkt hoped for, due to the Chinese New Year holidays, and sourcing of labor. Mgt expects to achieve 10% utilization on the new capacity (+19m shoe soles) by Mar ’11, and 50% utilization by Jun ’11. Thereafter, Qingmei will proceed with Phase 2 expansion to increase installed capacity by another 19m shoe soles.
On the bright side, mgt is confident of deploying the new capacity, as it comes on stream, due to strong customer demand.
On ASP, 2Q11 saw a 5% yoy decline in ASP to Rmb 25.7, due to shift in demand toward shoes with less functionality (eg. non-slip, high performance) and better aesthetic design. The ASP decline may persist, as China consumer trends shift away from sports shoes toward fashion shoes.
On raw material cost, Some increases expected, but mgt just contracted for them, and the higher cost should be manageable. Main raw materials are synthetic rubber, and EVA (ethylene vinyl acetate).
On dividends, Minimum 30% payout policy.
On customers, Pretty diversified customer base comprising of local brands. Added 2 more clients in the latest quarter, bringing total no. of clients to 88. Xtep is the largest contributor at >15% of sales.
Key uncertainties,
Mgt is concerned about being able to hire sufficient workers, especially after the minimum wage increase (now ~Rmb 1000/mth in Jinjiang, Fujian) prompted more competition for manpower. Then again, a back-of-envelop calculation suggests Qingmei’s avg salary per worker is ~Rmb 4000/mth. Mgt was unable to explain the disconnect.
* IPO: Hutchison Whampoa *
IPO: Hutchison Whampoa has received conditional approval from SGX to list its southern China port assets but did not specify any listing date. The listed flagship of HK tycoon Li Ka-shing will retain control of the assets via a 25% stake in HPH Trust, a new company it plans to list in Spore in the form of a business trust.
HPH Trust will hold Hutchison's key deep-water port assets in HK, Shenzhen & Macau, which together represent the most active port region in the world by volume. The assets account for about half of the overall Ebit of Hutchison's highly profitable ports unit, Hutchison Port Holdings, in which PSA Int’l holds a 20% stake.
Hutchison aims to start pre-marketing the US$3-6b IPO in mid-Feb with a view to listing it around mid-Mar. HPH Trust's planned offering could top SingTel's $4b IPO in 1993 to become Spore's biggest-ever listing.
HPH Trust's distributable income is expected to total HK$3.26b for the mid-Mar to Dec 11 period & HK$4.46b for 2012. If the 2011 forecast is annualized, the total distributable income forecast for 2012 would represent 8.2% growth.
HPH Trust will hold Hutchison's key deep-water port assets in HK, Shenzhen & Macau, which together represent the most active port region in the world by volume. The assets account for about half of the overall Ebit of Hutchison's highly profitable ports unit, Hutchison Port Holdings, in which PSA Int’l holds a 20% stake.
Hutchison aims to start pre-marketing the US$3-6b IPO in mid-Feb with a view to listing it around mid-Mar. HPH Trust's planned offering could top SingTel's $4b IPO in 1993 to become Spore's biggest-ever listing.
HPH Trust's distributable income is expected to total HK$3.26b for the mid-Mar to Dec 11 period & HK$4.46b for 2012. If the 2011 forecast is annualized, the total distributable income forecast for 2012 would represent 8.2% growth.
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