ISEC Healthcare: (S$0.34) Healthcare stocks in favour; this one appears a laggard
Amid an uncertain environment, healthcare stocks appear to have stood out. Notably, Singapore Medical Group’s (SMG) share price has nearly doubled this week on an earnings turnaround.
Meanwhile, Singapore O&G (SOG) has appreciated 63.2% from the beginning of Apr to $1.25 today. Within the healthcare sector, we find ISEC Healthcare to be a laggard.
ISEC provides competitively-priced eye surgery, care and consultancy services. It plans to expand into regional markets via M&As. When compared to SMG, which is just turning around, ISEC is already is profitable, with solid growth prospects and balance sheet.
From a valuation angle, ISEC is also cheap compared to SOG, which currently trades at 35x and 30x forward P/Es using the consensus estimates of three brokers. ISEC currently trades at 25x and 21x forward P/E.
SOG is an appropriate comparison for ISEC given that both are in single specialty practice, while SMG is a turnaround play, hence valuations are still a work in progress.
Interestingly, both SMG and ISEC have the same shareholder - Dr Tony Tan of Parkway. He owns about 4% of ISEC and 20% of SMG. SMG also has a good portion of its business coming from opthalmology.
As such, we see scope for both companies to work together in future. Arguably, there is also the possibility of a merger of equals once SMG is able to fully execute its turnaround strategy.
Friday, August 5, 2016
Bumitama
Bumitama: (S$0.69) 2Q16 results and output affected by lagged El Nino effects
- 2Q16 results disappointed as net profit slumped 39% to Rp107.6b.
- 1H16 earnings of Rp303b (-14%) met just 28% of full year street forecast.
- 2Q16 revenue fell 12.9% on lower volumes for both CPO (-23.6%) and palm kernel (-20%)
- FFB output declined 24.6% as FFB yield slumped 40.5% due to lagged impact from 2015's El Nino weather pattern.
- As a gauge, 1H16 FFB nucleus output contracted 17%, versus full year growth guidance of 8%. Maybank KE believes the optimistic projection may need to be revised down.
- House maintains its Hold rating and TP of $0.77 for Bumitama.
- 2Q16 results disappointed as net profit slumped 39% to Rp107.6b.
- 1H16 earnings of Rp303b (-14%) met just 28% of full year street forecast.
- 2Q16 revenue fell 12.9% on lower volumes for both CPO (-23.6%) and palm kernel (-20%)
- FFB output declined 24.6% as FFB yield slumped 40.5% due to lagged impact from 2015's El Nino weather pattern.
- As a gauge, 1H16 FFB nucleus output contracted 17%, versus full year growth guidance of 8%. Maybank KE believes the optimistic projection may need to be revised down.
- House maintains its Hold rating and TP of $0.77 for Bumitama.
UOL
UOL: (S$5.85) 2Q16 profit misses, dampened by policy and economic headwinds
- 2Q16 results trailed estimates as net profit tumbled on fair value loss on its investment properties
- Excluding the fair value loss, 1H16 core earnings would have come in at $167.2m (-3%) or just under 40% of FY16 street estimates.
- Revenue grew 6% to $363.6m on greater contributions from its property development and hotel operations
- Amid Brexit and the uncertain global economic outlook, management continues to guide for lacklustre demand for new homes due to government cooling measures, an impending glut in both the office and retail space and competitive tourism market in Asia Pacific.
- UOL is currently trading at a discounted 0.6x P/B.
- 2Q16 results trailed estimates as net profit tumbled on fair value loss on its investment properties
- Excluding the fair value loss, 1H16 core earnings would have come in at $167.2m (-3%) or just under 40% of FY16 street estimates.
- Revenue grew 6% to $363.6m on greater contributions from its property development and hotel operations
- Amid Brexit and the uncertain global economic outlook, management continues to guide for lacklustre demand for new homes due to government cooling measures, an impending glut in both the office and retail space and competitive tourism market in Asia Pacific.
- UOL is currently trading at a discounted 0.6x P/B.
Lippo Malls Trust
Lippo Malls Trust: (S$0.37) 2Q16 results beat on new acquisitions; two more in pipeline
-2Q16 rose 16.3% to 0.85¢, ahead of estimates.
- Revenue ($46.8m, +10.8%) and NPI ($43.1, +10.4%) were boosted by the acquisition of Lippo Plaza Batu and Palembang Icon
- Occupancy inched up 0.1ppt q/q to 94.8%, aggregate leverage was steady at 35.7%.
-The proposed acquisitions of Lippo Mall Kuta and Lippo Plaza Yogjakarta are expected to provide income growth when completed
- Trading at 9.1% annualized 2Q yield, and 1x P/B.
-2Q16 rose 16.3% to 0.85¢, ahead of estimates.
- Revenue ($46.8m, +10.8%) and NPI ($43.1, +10.4%) were boosted by the acquisition of Lippo Plaza Batu and Palembang Icon
- Occupancy inched up 0.1ppt q/q to 94.8%, aggregate leverage was steady at 35.7%.
-The proposed acquisitions of Lippo Mall Kuta and Lippo Plaza Yogjakarta are expected to provide income growth when completed
- Trading at 9.1% annualized 2Q yield, and 1x P/B.
SingPost
SingPost: 1QFY17 results fall short; e-commerce still not delivering*
-1QFY17 core net profit $35.8m (-11%)
-1QFY17 revenue $333.4m (+31%) - bolstered by new subsidiaries in e-commerce and logistics
-Bottom line hit by loss of rental income, higher depreciation, and higher marketing expenses for US e-commerce biz
-Maintained 1Q DPS of 1.5¢
-Maybank KE views that SingPost will need to put in more investment to scale up e-commerce biz, thereby opines that street's earnings projection could be overly bullish
-weakening earnings may spark a challenge to maintain full year dividend payout of 7¢ in FY15
-Maybank KE maintains Sell, with street low TP of $1.29.
-1QFY17 core net profit $35.8m (-11%)
-1QFY17 revenue $333.4m (+31%) - bolstered by new subsidiaries in e-commerce and logistics
-Bottom line hit by loss of rental income, higher depreciation, and higher marketing expenses for US e-commerce biz
-Maintained 1Q DPS of 1.5¢
-Maybank KE views that SingPost will need to put in more investment to scale up e-commerce biz, thereby opines that street's earnings projection could be overly bullish
-weakening earnings may spark a challenge to maintain full year dividend payout of 7¢ in FY15
-Maybank KE maintains Sell, with street low TP of $1.29.
Genting SP
Genting SP: (S$0.76) 2Q16 results smashed as lady luck takes her leave*
- Despite trimming its net loss to $10.5m (2Q15: $16.9m), it reversed 1Q16's profit of $10.8m
- Revenue tumbled to $48.9m (-17% y/y, -26% q/q) as gross gaming revenue slumped
- In view of the dismal results, no interim dividend was declared (2Q15: 1.5¢).
- Maybank KE notes that the fall in RWS’s VIP and mass market GGR is at odds with various industry barometers.
- Our house downgrades its rating on the counter to Sell from Hold and cuts TP to $0.71 from $0.78.
- Despite trimming its net loss to $10.5m (2Q15: $16.9m), it reversed 1Q16's profit of $10.8m
- Revenue tumbled to $48.9m (-17% y/y, -26% q/q) as gross gaming revenue slumped
- In view of the dismal results, no interim dividend was declared (2Q15: 1.5¢).
- Maybank KE notes that the fall in RWS’s VIP and mass market GGR is at odds with various industry barometers.
- Our house downgrades its rating on the counter to Sell from Hold and cuts TP to $0.71 from $0.78.
Yangzijiang
Yangzijiang: (S$0.875) 2Q16 misses on double whammy of falling sales and increased expenses
-2Q16 net profit missed estimates, crashing 60% to Rmb415.4m.
- Revenue tumbled 48% to Rmb2.99b, dragged by all segments. Shipbuilding (-51.8%) on lower vessels delivered (2Q16: 7, 2Q15: 11). Trading business saw income fall 37.7% to Rmb883.9m on lower volumes.
- Finance costs soared 90% to Rmb126m from a revaluation loss from USD borrowings, as the USD appreciated against the Rmb.
- Net gearing inched 2.1ppt higher to 6.4%.
- Ytd new orders of 10 vessels worth US$600m. In 2Q, three more shipbuilding orders were terminated (production not started).
- Trading at 0.76x P/B.
-2Q16 net profit missed estimates, crashing 60% to Rmb415.4m.
- Revenue tumbled 48% to Rmb2.99b, dragged by all segments. Shipbuilding (-51.8%) on lower vessels delivered (2Q16: 7, 2Q15: 11). Trading business saw income fall 37.7% to Rmb883.9m on lower volumes.
- Finance costs soared 90% to Rmb126m from a revaluation loss from USD borrowings, as the USD appreciated against the Rmb.
- Net gearing inched 2.1ppt higher to 6.4%.
- Ytd new orders of 10 vessels worth US$600m. In 2Q, three more shipbuilding orders were terminated (production not started).
- Trading at 0.76x P/B.
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