Olam: Macquarie says "it's a good time to revisit" Olam . While it doesn't expect Olam to reach its net profit target of US$1 b by FY16, due to margin shortfalls, it forecasts a powerful growth trajectory as new investments contribute, estimating 24% CAGR ex-biological gains through FY16.
Says it's not only intrinsically compelling, but also best among the agri players under its coverage. Cuts TP to $2.80 from $3.10 after lowering FY12-13 EPS, forecasts an average 15% on recent disappointing results.
Expects a 4th successive quarter of flat growth to be reported for fiscal 3Q12 in May, as profit in the Industrial Raw Materials division remains subdued, before seeing a rebound in fiscal 4Q12. From FY13 onwards, sees very strong earnings growth as Olam's new investments start to contribute more meaningfully.
Keeps an Outperform call, tipping it as its top Singapore-listed agribusiness pick.
The stock is up 0.4% at $2.32.
Tuesday, April 17, 2012
YangZiJiang
YangZiJiang: AmFraser recommends now is the time to buy Yangzijiang on a dip. House believe that 1Q12 results will surprise on the upside against consensus, prompting upward estimate revisions and higher valuations. Estimates YZJ trades at 5.5X forward P/E, based on AmFraser's 2012F EPS estimate of S$0.219 and a 5% forward div yield, saying it's "very attractively priced for one of the top three shipbuilders in China, and certainly the most profitable.
Add that YZJ's profitability has been accelerating over the past 12 qtrs, delivering Rmb1.04b profit in 4Q; given that operations have not changed, similarly, expect just over Rmb1b this qtr, 18% ahead of consensus. Note slower-than-expected margin declines offer some upside potential to its above-consensus 2012 profit-after-tax-and-minority-interests forecast of Rmb4.2b. House has a Buy call with $1.60 TP.
Add that YZJ's profitability has been accelerating over the past 12 qtrs, delivering Rmb1.04b profit in 4Q; given that operations have not changed, similarly, expect just over Rmb1b this qtr, 18% ahead of consensus. Note slower-than-expected margin declines offer some upside potential to its above-consensus 2012 profit-after-tax-and-minority-interests forecast of Rmb4.2b. House has a Buy call with $1.60 TP.
Biosensors
Biosensors: stock is -4.8% at $1.50 on above avg volume.
Biosensors’ price action coincides with news that “the first fully biodegradable coronary artery stent implanted in humans proved safe in a 10yr study” published in Circulation, an American Heart Association journal.
Stents are mesh tubes inserted into coronary arteries to help prop them open and allow for blood flow to the heart muscle.
The biodegradable Igaki-Tamai stent is used in 9 EU countries and Turkey -- but not in the US -- to treat peripheral artery disease (PAD), the disorder which results from fatty deposits that narrow leg arteries.
While no countries have approved the Igaki-Tamai stent for treating clogged heart arteries (and such approval may take time), this signals that biodegradable stents as a new competing technology could be closer to hand than expected. Current treatment options comprising bare-metal stents and drug-eluting stents (DES), and Biosensors’ main pdt, BioMatrix is one such DES approved for use outside the US.
Biosensors’ price action coincides with news that “the first fully biodegradable coronary artery stent implanted in humans proved safe in a 10yr study” published in Circulation, an American Heart Association journal.
Stents are mesh tubes inserted into coronary arteries to help prop them open and allow for blood flow to the heart muscle.
The biodegradable Igaki-Tamai stent is used in 9 EU countries and Turkey -- but not in the US -- to treat peripheral artery disease (PAD), the disorder which results from fatty deposits that narrow leg arteries.
While no countries have approved the Igaki-Tamai stent for treating clogged heart arteries (and such approval may take time), this signals that biodegradable stents as a new competing technology could be closer to hand than expected. Current treatment options comprising bare-metal stents and drug-eluting stents (DES), and Biosensors’ main pdt, BioMatrix is one such DES approved for use outside the US.
Tiger
Tiger: To purchase 40% stake in SEAIR for US$7.0m instead. The earlier plan announced on Feb 2011 had been to purchase a 32.5% stake in SEAIR for US$6.0m. SEAIR operates in the Philippines and specializes in short-haul point-to-point flights within a 5-hr radius. Tiger now trades at 2.3x P/B. Share price has been listless, in a downtrend, on low volumes despite the 50 day MA crossing the 200 day. See support at current lvls $0.73-0.74
NOL
NOL: OOCL has announced rate hikes of US$500/TEU with effect 1 may'12. Increase applies on services to Australia from SG, Msia, Thailand, Indonesia, Vietnam, Cambodia, the Philippines, the Indian subcontinent and the Middle East.
K-REIT
K-REIT: Announced 1Q12 results which were above estimates. NPI at $28.5m, +90.8% yoy and +60.6% qoq, while DPU at 1.9c, +6% yoy and +36% Qoq. (Comparison based on pre-adjustment for rights) The sharp qoq increase was boosted by the full quarter’s contribution from Ocean Financial Centre acquisition completed in Dec-11.
Strong performance was due largely to higher contributions from grp’s existing properties and the newly acquired OFC, which contributed $17.3m to property income. Share of results of associates also increased 82.6% to $11.2m as a result of higher contributions from BFC Dev and ORQ. Interest income also increased 22.0% to $6.9m, due mainly to the coupon interest income from 8 Chifley Square and higher interest income on the shareholder loan to BFC Dev.
Going ahead, grp remains confident of prospects and note that its long portfolio WALE of 6.4 yrs, good quality tenants and limited amount of leases due for rent review and renewal will mitigate downside risks. Aim to focus on attracting new tenants, retaining its existing tenants, and managing its lease profile. Manager will also selectively pursue opportunities for strategic acquisitions.
We note that grp’s fundamentals remain strong with an annualized Distribution yield of 7.9% vs SGX office REITs yield of 6.2%, while overall portfolio occupancy rate stood at 96.1%. Leverage ratio stood at an acceptable 41.8% vs SG Office reits average of approximately 35%, while interest coverage stood at a comfortable 5.5x. Note however that K-REIT is currently receiving rental support from parent K-Land on its OFC acquisition.
Ratings as follow:
Citi maintains neutral with $0.88 TP
Deutsche maintains Hold with $0.94 TP
UOB Kay Hian maintains Hold with $0.95 TP
Strong performance was due largely to higher contributions from grp’s existing properties and the newly acquired OFC, which contributed $17.3m to property income. Share of results of associates also increased 82.6% to $11.2m as a result of higher contributions from BFC Dev and ORQ. Interest income also increased 22.0% to $6.9m, due mainly to the coupon interest income from 8 Chifley Square and higher interest income on the shareholder loan to BFC Dev.
Going ahead, grp remains confident of prospects and note that its long portfolio WALE of 6.4 yrs, good quality tenants and limited amount of leases due for rent review and renewal will mitigate downside risks. Aim to focus on attracting new tenants, retaining its existing tenants, and managing its lease profile. Manager will also selectively pursue opportunities for strategic acquisitions.
We note that grp’s fundamentals remain strong with an annualized Distribution yield of 7.9% vs SGX office REITs yield of 6.2%, while overall portfolio occupancy rate stood at 96.1%. Leverage ratio stood at an acceptable 41.8% vs SG Office reits average of approximately 35%, while interest coverage stood at a comfortable 5.5x. Note however that K-REIT is currently receiving rental support from parent K-Land on its OFC acquisition.
Ratings as follow:
Citi maintains neutral with $0.88 TP
Deutsche maintains Hold with $0.94 TP
UOB Kay Hian maintains Hold with $0.95 TP
SATS
SATS: released 4Q12 operating data.
Flights handled and passengers handled were up 9.6% and 10% rptvly.
Meals produced was up 6.3% accordingly on the back of higher pax growth.
In contrast, cargo/ mail processed declined by 2.4% due to soft consumer demand especially for electronics and manufactured gds in mkts like Europe and Americas.
UOBK notes, the improvement in unit services handled suggests an equivalent increase in gateway services revenue. Says, overall, the Singapore based operations is likely to show an operating margin improvement, given the strong headline stats.
However, believes TFK remains a wild card and the market will be looking for signs of improved profitability from this division. TFK reported a minor $1.5m in operating profit on $82m in revenue for 3QFY12. JAL's 2MFY12 traffic showed qoq declines and this suggests lower revenue for TFK. It remains to be seen if the unit achieved cost savings, leading to improved margins.
UOBK maintains its Hold rating with an ex-div TP of $2.43. Estimates that SATS will report a special dividend of 17 cts + final dividend of 8 cts when it releases full year results on 14 May.
Flights handled and passengers handled were up 9.6% and 10% rptvly.
Meals produced was up 6.3% accordingly on the back of higher pax growth.
In contrast, cargo/ mail processed declined by 2.4% due to soft consumer demand especially for electronics and manufactured gds in mkts like Europe and Americas.
UOBK notes, the improvement in unit services handled suggests an equivalent increase in gateway services revenue. Says, overall, the Singapore based operations is likely to show an operating margin improvement, given the strong headline stats.
However, believes TFK remains a wild card and the market will be looking for signs of improved profitability from this division. TFK reported a minor $1.5m in operating profit on $82m in revenue for 3QFY12. JAL's 2MFY12 traffic showed qoq declines and this suggests lower revenue for TFK. It remains to be seen if the unit achieved cost savings, leading to improved margins.
UOBK maintains its Hold rating with an ex-div TP of $2.43. Estimates that SATS will report a special dividend of 17 cts + final dividend of 8 cts when it releases full year results on 14 May.
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