The Edge - Brokers' Digest (November 5 - November 11, 2007)

Ace Achieve Infocom (Nov 1: 13 cents) TP: 17 cents
MAINTAIN HOLD. Revenues grew only 4% in FY2007 over FY2006 (restated) and gross margin declined six percentage points to 25 % on the back of pricing pressures. Net profit rose 53% to $22.4 million from $14.6 million in FY2006, owing to a significant reduction in R&D and other operating expenses and a one-off reversal of income tax provisions of $2 million. Growth is expected to come from the 3G network construction business in China. We have revised down our earnings estimates for FY2008 by 27 % on clearer guidance by management about the quantum of revenue expected from 3G-related orders. Unchanged one-year target price of 17 cents pegged at 10x FY2008 earnings. - DBS Vickers Securities (Oct 30)

DBS Group Holdings (Nov 1: $22.60) TP: $25
UPGRADE TO BUY. DBS reported 3Q2007 net profit of $610 million, up 11 % y-o-y and 9 % q-o-q, driven by fee and commission income and net interest income but partly, offset by higher allowances. Shareholders of DBS have a year-to-date total return of 0%, which is lower than the 13% simple average for the three Singapore banks, partly owing to market concerns that DBS's allowances for collateralised debt obligations could be high. DBS has clarified that none of the CDOs whose value was marked down is in default, and we believe investors will be more optimistic about DBS's prospects. We roll over the base for valuation to 2008 and, using a 2.4x P/RNTA, arrive at a target price of $25. - UOB KayHian (Oct 30)

Oniontech (Nov 1: 11 cents) TP: 6 cents
MAINTAIN SELL. The company has announced that the contract with LG Telecom for its Ring Back Tone Services (RBT) will not be renewed next year. This news will have a negative impact on the company as RBT was the biggest driver for the growth in revenue — contributing 66% and 70% of total revenues in 2005 and 2006 respectively. With the contract set to be terminated by year-end, we have trimmed our estimate of the revenues in 2008 by 60%to $13.5 million and expect a net loss of $200,000 in FY2008. With no contribution from RBT in 2008 and subsidiaries continuing to make losses, we see no potential drivers for growth. At P/BV of 0.5x, we arrive at a fair value of six cents. - DBS Vickers Securities (Oct 29)

Aztech Systems (Nov 1: 38 cents) TP: 47 cents
MAINTAIN BUY. Revenue increased 8.9 % y-o-y to $67.5 million but net profit was down 28.6% to $3.6 million. For the FY to date, Aztech has secured $270 million worth of contracts, of which $85 million has yet to be fulfilled. Our FY2007 revenue and net profit forecasts are lowered to $264.3 million and $17.5 million respectively. Revenue and net profit forecasts for FY2008 have also been reduced to $324.7 million and $23.8 million. Our recurrent free cash flow-derived fair value has been lowered to 47 cents after revising our forecasts downwards. At its current price of 37 cents, Aztech is trading at a discount of 27.1 % to our fair value and with a forecast dividend yield of 3.6%. - NRA Capital (Oct 30)

Federal Int'l (2000) (Nov 1: 83 cents) TP: $1.02
MAINTAIN BUY. Federal announced that it had entered into a stock sale agreement with T-3 Energy Services Inc for the sale of Federal's 60 %-owned Houston-based subsidiary, HP&T Products Inc. Federal's gain on the disposal of HP&T is $15.8 million. We are concerned about the FSO supply market and the execution risks faced in these maiden projects. As such, we await the successful execution of its BOT project for Natural Fuel Ltd in the next few months. Our revised forecast is now $23.2 million and $16.6 million for FY2007 and FY2008 from $17.1 million and $20.4 million respectively. Our fair value is revised slightly downwards to $1.02 (from $1.05), based on a PER of 15x FY2008 fully diluted earnings. - OCBC Investment Research (Nov 1)

Osim Int'l (Nov 1: 60 cents) TP: $1
OUTPERFORM. Annualised 3Q2007 core Osim EPS of six cents equates to a PER of 10x. This excludes any value for Brookstone. The shares appear to have found a floor at 60 cents. At this level, assuming zero value for Brookstone, the Osim brand is valued at only US$220 million. We introduce a new fair value of $1, representing an upside of 68 %. Our fair value is based on a value of 80 cents for core Osim (12.5x 2008E core Osim EPS) and a value of 20 cents for Brookstone (half of our estimated valuation of 40 cents based on 10x 2008E EV/Ebitda, to take into account current US macro concerns and resulting forecasting risk). Our new forecasts assume 12 % revenue growth for core Osim in both FY2008E and FY2009E. - Cazenove Research (Oct 29)

Chartered Semiconductor Mfg (Nov 1: $1.10) TP: $1.13
MAINTAIN HOLD. Revenue is down 0.1 % y-o-y but up 9.4 % q-o-q at US$354.8 million. The results beat its guidance of a muted 2 % to 6 % q-o-q rise to US$332 million to $344 million, and our US$340 million ($493 million) forecast. However, Chartered surprised with an unexpected tax benefit of US$118.5 million, boosting its net profit to US$114.8 million. As such, we are bumping our FY2007 earnings estimate up from a net loss of US$8.9 million (before accretion) to a net profit of US$98.2 million. Excluding the tax benefit, the net loss actually increases to US$20.3 million. Still, because of the tax benefit, our fair value improves from $1.09 to $1.13, still based on based on 1.3x blended FY2007/08 NTA. - OCBC Investment Research (Oct 26)

Hiap Hoe (Nov 1: 93.5 cents) TP: $1.45
MAINTAIN BUY. Hiap Hoe entered into another 60:40 joint venture with Superbowl Holdings recently to acquire a freehold residential site, The Aspine, along Balmoral Road for $138 million (no development charge payable). Prices have been locked in for developments that have been launched and fully sold, and no adjustment of the average selling price (ASP) is required. The assumed ASP for upcoming launches was reduced by 10% to reflect negative sentiment resulting from the withdrawal of the deferred payment scheme. We have revised our price target for Hiap Hoe to $1.45, pegged at parity to RNAV. Hiap Hoe is trading at 19.1x FY2007F PER and 4.7x FY2008F PER (54% upside). - Westcomb Securities (Oct 30)

Ossia Int'l (Nov 1: 40 cents) TP: 49 cents
UPGRADE TO BUY. Ossia is selling its 80% stake in its Millie's footwear business to Belle Int'l Holdings for HK$480 million ($90 million). With the disposal of a major future earnings driver, we believe that Ossia will be in search of new opportunities to drive the group forward. Management plans to distribute part of the proceeds from the sale to shareholders in the form of a cash and/or capital-reduction exercise. At the current share price, the market is not attaching any value to the rest of Ossia's distribution business, which is profitable. We have raised our 12-month target price to 49 cents from 25 cents after factoring in the potential realizable value for its investment in Millie's and fine-tuning our valuation approach. - Standard & Poor's (Oct 29)

Chuan Hup Holdings (Nov 1: 39.5 cents) TP: 48 cents
BUY. Following the sale of CHH's marine logistics business to Scomi Group in September 2005, CHH is now an investment holding company. Its key holdings include a 23.2 % stake in Scomi Marine, 23 % in CH Offshore, 33 % in PCI and stakes in several listed property entities in Australia. CHH recently reported stellar FY2007 results, with net profit surging 28 % to US$23 million, boosting NAV per share to 33 US cents. The stock currently trades at a steep 24% discount to NAV. Our SOTP valuation for the stock works out to 54 cents. Applying a 10% holding company discount, our target price is 48 cents, with 26% potential upside. - Kelive Research (Nov 1)

Jackspeed Corp (Nov 1: 23.5 cents) TP: 19 cents
DOWNGRADE TO SELL. 1HFY2008 net profit of $1 million (-32 % y-o-y) was within our expectations. The profit decline was mainly due to a 28% fall in leather sales to $10.7 million, higher raw material costs and a $300,000 start-up loss by its Thai associates, Aapico Jackspeed and Katsuya Thailand. We are maintaining our FY2008 and FY2009 net profit forecasts of $3.3 million and $4.2 million respectively. At the current price, Jackspeed is trading at a 21 % premium to our revised 12-month target price of 19 cents, a result of the rolling forward of the target PER to FY2009. Our target price is based on 9x our projected FY2009 EPS of 1.94 cents, and adding estimated net dividend per share of one cent. - Standard & Poor's (Nov 1)

Pan Hong Property (Nov 1: 96.5 cents) TP: $1.29
MAINTAIN OUTPERFORM. Based on pre-sold units of its Nanchang project as at early October, we believe Pan Hong has locked in almost 100% of our estimated revenue for FY2007 and 14 % for FY2008. We have lifted our FY2007 to FY2009 EPS estimates between 1.5 % and 32.2 % as we raise the ASP for different projects between 11 % and 25 %. With 1.8 million sq m of attributable land bank spread across second- and third-tier cities in China, Pan Hong is set to tap the expanding property market. We continue to peg our target price at our NAV estimate of $1.29, which now includes our revised assumptions and value-enhancement from potential land deals. - CIMB-GK Research (Oct 31)

CWT (Nov 1: $1.29) TP: $1.46
MAINTAIN BUY. CWT has entered into a joint venture with SPL Co Ltd - a consortium of local logistics professionals - to develop logistics facilities in Vietnam, a fast-growing economy in Southeast Asia. Following our last report dated Aug 20, CWT has exceeded our previous price target of $1.10. Over the past 12 months, its network has grown tremendously with the inclusion of the Tianjin Logistic Hub, and Ukraine and Vietnam logistic facilities. We believe it is justified to reduce the RNAV discount factor to 20 %, down from 40% previously, to recognise this growth. As such, we raise our price target to $1.46, providing an upside potential of 15 %. - Westcomb Securities (Nov 1)

Jiutian Chemical Group (Nov 1: 63 cents) TP: 75 cents
MAINTAIN OUTPERFORM. We visited Jiutian's new DMF plant in China recently and witnessed the plant's fast ramp-up. We also saw the construction of the new methanol plant, on track for trial production by mid-2008. In view of higher methanol prices recently, we expect margins to decline over the next three quarters before the plant comes onstream. We have reduced our FY2007/08 EPS forecasts between 12 % and 29 % to factor in lower ASP assumptions, a slower ramp-up of the methanol plant and higher methanol prices. However, our DCF-derived target price has been raised from 63 cents to 75 cents (WACC 14 %, LTG 1.5 %) as we roll forward our valuation basis to CY2008. - CIMB-GK Research (Oct 31)

Samudera Shipping Line (Nov 1: 42 cents) TP: 50 cents
UPGRADE TO BUY. 3Q2007 revenue fell 9.4% y-o-y to $149 million, mainly owing to the shift in container volume mix and the weakening of the US dollar. However, the decline was mitigated by the increase in industrial shipping revenue, better vessel utilisation and the successful of the rationalisation of its shipping services. Margins also improved significantly from the previous period. Gross profit margin was 12.8 % and net profit margin registered at 6.9 %. Pegged at an undemanding 8.5x FY2007 earnings and P/BV of 0.9x, this counter has a fair value estimate of 50 cents. - Phillip Securities Research (Nov 1)

Singapore Airlines (Nov 1: $19.70) TP: $22.80
MAINTAIN BUY. SIA has posted a net profit of $507.8 million for 2Q2008, bringing its half-year tally to $931.9 million. The quarterly result represented a 73 % improvement over 2Q2007 and a 20% growth over an already-impressive 1Q2008. This level of profit growth was also achieved despite strong headwinds of fuel costs, which saw market jet kerosene prices rise by 16% over the quarter. With the good result, SIA has declared an interim dividend of 20 cents a share (tax-exempt and single-tier). We are raising our FY2008 forecast for SIA by 15 % to $1.9 billion, from $17 billion previously. On the back of this, we are raising our fair value target price on SIA to $22.80 from $21.30 previously. - Kim Eng Research (Nov 1)

SP Chemicals (Nov 1: $1.12) TP: $1.36
DOWNGRADE TO NEUTRAL. 3Q2007 net profit of 57 million renminbi ($11 million) (down 13 % y-o-y) is 7% and 5% below consensus and our expectations, respectively. Key variances were lower-than-expected sales and higher-thanexpected interest expenses. 9M2007 net profit forms 71 % and 81 % of consensus and our previous full-year forecasts, respectively. Sales declined 18% y-o-y in 3Q2007 on the back of weaker aniline and caustic soda prices and lowerthan-expected aniline output. Our EPS estimates have been cut in response to lower ASP assumptions and a slower ramp for its vinyl chloride monomer plant. Accordingly, our target price has been reduced from $1.83 to $1.36, still based on 6x CY2008 earnings, or a 50% discount to Singapore Exchange-listed chemical producers. - CIMBGK Research (Oct 31)

United Overseas Bank (Nov 1: $21.20) TP: $24
BUY. UOB's 9M2007 profit $1.6 billion was 74 % of FY2007 estimates but 3Q profit of $501 million (down 14% q-o-q) was disappointing. We maintain forecasts as management guided that much of the marked-to-market losses in 3Q were likely one-off and underlying mortgage growth (up 21 % y-o-y) are firm, suggesting a better core performance in 4Q. Our target price is $24. Using a dividend discount model, assuming a 2008E net dividend per share of 71 cents, and cost of equity of 10.8%, we arrive at a fair-value PER of 14.5x 2008E, which when applied to our 2008E EPS of $1.64, derives a fair value of $24, or a 2007E PER of 16.7x. - Citigroup Research (Oct 30)

Singapore Airport Terminal Services (Nov 1: $2.93) TP: $3.59
MAINTAIN BUY. SATS registered 2QFY2008 net profit of $49 million, down 7% y-o-y but up 1% q-o-q. The core business in Singapore performed in line with our expectations but profit contribution from overseas joint ventures was lower than expected. Although SATS' earnings remain unexciting, we continue to like it as a cheaper, scarce and less risky investment in the strong Asian air traffic growth, particularly with the current volatile fuel prices. Valuations are at a 40 % discount to peers. Interim DPS is four cents (45% payout ratio) but higher/special dividends are likely, given SATS' strong cash flow and low maintenance capital expenditure in the next two to three years. Cash levels have risen to $590 million, or 55 cents a share, as at end-September, amounting to 18 % of current market cap. Target price of $3.59. - Citigroup Research (Oct 31)

Suntec REIT (Nov 1: $1.83) TP: $2.18
MAINTAIN BUY. Suntec REIT reported 4Q2007 revenue of $51.1 million (up 14 % y-o-y and 9% q-o-q). Distributable income was equally strong at $30.4 million (up 22% y-o-y and 1% q-o-q). At the DPU level, growth was more moderate at 11 % y-o-y and 1% q-o-q to 2.12 cents. Growth was mainly due to the increase in office and retail revenue, owing to better rates and higher occupancy rates. However, higher property expenses, specifically from higher property tax and property management fees, eroded much of the better revenue. This led to NPI margin falling from to 71% from 73 % in 3Q2007 and 4Q2006. The results were 4.5 better than our estimates. Fair value of $2.18. - OCBC Investment Research (Oct 30)

UOL Group (Nov 1: $5.10) TP: $5.85
MAINTAIN BUY. UOL's 3Q2007 net profit of $64.5 million came in above expectations, owing to a $17.8 million negative goodwill. Otherwise, bottom line would have risen 48 % y-o-y, led by better performance across all its operating divisions. Its hotel operations enjoyed better operating leverage and residential contributions were supported by continued progressive billings from four pre-sold projects. Rental income benefited from decanting activities at Novena Square and better rental rates at its commercial properties. UOL should continue to enjoy robust hotel and leasing income, thanks to strong demand and better rates. The stock is trading at a 14% discount to our price target of $5.85. - DMG & Partners (Oct 29)

SMRT (Nov 1: $1.77) TP: $1.52
SELL. 2Q net profit rose 25% to $40 million, owing to lower-than-expected operating costs and higher MRT revenues. Rail revenues improved 5.7% on a 6% rise in ridership. Bus revenues were 0.7% higher but Ebit declined to $800,000 from $1.6 million in 2Q2007, owing to higher staff and diesel costs. Taxi operations turned around with a small profit of $200,000. Ebit from the retail space progressed 16%. We raise our FY2008 to FY2010 forecasts between 8% and 10% on higher rail revenues and lower operating costs, and raise our target price to $1.66 from $1.52 on our higher FY2009 EPS forecast, applying a PER of 18x. SMRT trades at a high PER of 19x FY2009, which we deem rich relative to growth, yet is supported by an estimated net yield of 4.2. - Citigroup Research (Oct 29)

Thomson Medical Centre (Nov 1: 74.5 cents) TP: 78.5 cents
MAINTAIN BUY. Net profit grew 40.3 % to $9.5 million on the back of revenue growth of 12.6 % to $52.4 million. For 2112007, net profit grew 45.1 % to $5.1 million and revenue grew 17% to $28.1 million. The growth of the top line is mainly driven by both the hospital operations and ancillary services, as well as specialised and other services business segments. We forecast FY2008 net profit of $10.5 million, representing a 10.4% growth y-o-y and 18.1 % growth y-o-y, if we remove the one-time gain on FY2007. We still peg our PER at 24x FY2007, and reach a fair value of 78.5 cents. If we consider the estimated interim dividend for FY2008 (two cents a share) and the declared dividend for FY2007 (one cent a share), both together give us an upside potential 16.4%. - Phillip Securities Research (Oct 31)

Yangzijiang Shipbuilding Holdings (Nov 1: $2.41) TP: $3.05
BUY. We continue to like YZJ as a key beneficiary of the wave of shipbuilding orders flowing to China, which is gaining market share from South Korean and Japanese shipyards. As the largest private containership builder in China and among the top 10 globally for containerships, we believe YZJ is well positioned to benefit from the strong demand for bulk carriers and containerships. Backed by a record order book of 35.8 billion renminbi, representing 9x its FY2007 revenue, this underpins earnings visibility till FY2010. Our target price of $3.04 is based on a target PER of 28x on FY2009 earnings for YZJ, translating into an undemanding PEG of 0.6x on its three-year EPS CAGR of 58 %. - DBS Vickers Securities (Oct 29)

Copyright
Disclaimer

Read More...

Summary only...

The Edge - Brokers' Digest (October 29 - November 4, 2007)

Ascott Residence Trust (Oct 25: $1.63) TP: $1.94
UPGRADE TO BUY. Revenue was $42.3 million (9 % above forecast) and distributable income was $12 million (9% above forecast) due due to outperformance in Singapore, the Philippines and Vietnam. Distribution per unit (DPU) was 1.99 cents, better than our estimate of 1.70 cents. In light of the good performance, we are adjusting our FY2007 and FY2008 forecast from 6.8 cents and 6.9 cents to 7.65 cents and 8.01 cents, respectively. Since our last report, ART has corrected from $1.85 to its last traded price of $1.58. More importantly, the price correction means that ART's price-to-book ratio has come down from 1.34x (April) to the present 1.14x. Fair value of $1.94. - OCBC Investment Research (Oct 25)

Guocoland (Oct 25: $5.45) TP: $6.16
MAINTAIN BUY. Net profit growth of 241 % to $27.1 million y-o-y for 1Q2008 is within expectations, mainly driven by contributions from the West End Point project. It is expected to launch the Goodwood Residence project this year. We expect strong sales and selling prices, and raise our selling price assumptions from $2,200 to $3,000 psf, raising our net present value surplus from Singapore development projects by $187 million. We have re-worked our assumptions for the integrated projects with more insights after the site visit, higher capital value assumptions for Tung Centre, Goodwood Residence as well as factoring in the Toho Garden site. Target price of $6.16 with 10% premium. - DBS Vickers Securities (Oct 22)

Qian Hu (Oct 25:19.5 cents) TP: 25 cents
MAINTAIN BUY. Qian Hu reported 3QFY2007 revenue growth of 19.6% from $18.9 million to $22.7 million. The growth was backed by strong performance from Qian Hu's ornamental fish and accessories sales. As a result, net profit attributable to shareholders doubles from $600,000 in the same period a year ago to $1.2 million in the current period. Contributions from ornamental fish and accessories account for 88% of total revenue while the plastic business accounts for the other 12 %. We project a three-year CAGR revenue growth of 17% in our estimates. Our fair value of 25 cents is pegged to a 15x blended FY2007/2008 earnings. - Phillip Securities Research (Oct 23)

CapitaMall Trust (Oct 25: $3.68) TP: $4.56
MAINTAIN BUY. CMT announced 3Q2007 distribution income of $53.2 million. 3Q2007 DPU was 3.4 cents. CMT has continued to reap the benefits of its successful asset-enhancement initiatives. We expect its results to be even better in 4Q as income from its recently acquired CRS malls is progressively booked. We have added two new AEI (asset-enhancement initiatives) projections for Lot One ($40 million) and Tampines office ($69 million). Management has a target AUM (asset under management) of $8 billion by 2010. Our one-year forward DCF price target of $4.56 is unchanged and offers 24 % potential upside with CY2008E DPU yield of 4.0%. - UBS Investment Research (Oct 23)

Keppel Land (Oct 25: $8.30) TP: $8.97
MAINTAIN HOLD. For 3QFY2007, Keppel Land reported net earnings of $81.8 million, equivalent to a 30% q-o-q rise and doubling from a year ago. Revenue was up 6.4% q-o-q and 49% y-o-y. Including the $125.5 million reported in 1H2007, net earnings YTD amounted to $207.3 million, largely in line with our forecast of $277.7 million for the full year (excluding the sale of One Raffles Quay). Property sales performed strongly from projects in Singapore and overseas, with net attributable profit rising 48% q-o-q and 136% y-o-y. Sale of ORQ to add $221.6 million to net profit in 4Q. We maintain our target price of $8.97. - Citigroup Research (Oct 23)

Raffles Medical Group (Oct 25: $1.53) TP: $2.05
BUY (initiating coverage). Raffles Medical Group (RMG) is an integrated private healthcare provider. Raffles Hospital has stepped up the pace of expansion adding 25 beds in 1H2007 and making plans to add another 25 beds in 2H2007 to bring the total to 200 beds. RMG operates the largest network of 60 family medicine clinics in Singapore. It leverages on this extensive network to build up a base of 5,000 corporate clients. Corporate clients account for 65 % of patient volume at its chain of clinics. RMG is the prime beneficiary of the liberalisation of Medisave. Our target price is $2.05 based on our three-stage DCF model. - UOB KayHian (Oct 23)

Delong Holdings (Oct 25: $3.04) TP: $3.67
MAINTAIN OUTPERFORM. Delong's recent profit warning for 3Q2007 was its second consecutive one. The surge in iron ore prices had been faster than HRC selling-price increases in 3Q, squeezing margins. We now expect gross margins to decline from 16.3 % in 2Q to 12% in 3Q, with a $433.2 million revenue and $32.7 million net profit. We have cut our FY2007-2009 earnings forecasts by 35% to 43%, producing a new target price of $3.67 (previously $4.70), based on a new CY2008 PER target of 10x (previously 12x) to reflect higher execution risks and Delong's inability to mitigate exposure to higher raw material prices. - CIMB-GK Research (Oct 23)

Man Wah Holdings (Oct 25: 72 cents) TP: 41 cents
MAINTAIN SELL. Man Wah Holdings announced on Oct 16 that Schieder Cheers GmBH, a company that is 40% -owned by Man Wah and 60% by the Schieder Group, has been declared insolvent by the German courts as a result of its parent company, the Schieder Group being declared insolvent. We have revalued our fair value estimate to 41 cents per share, derived from a PER of 7x (based on the Group's P/E band) pegged to FY2008 earnings, implying a 42.25 % downside. Our negative view is based on the technical outlook of the Group's shares, insolvency of the German subsidiary and the Group's exposure to the US housing industry. - Phillip Securities Research (Oct 22)

Silverlake Axis (Oct 25: 67 cents) TP: 83.5 cents
UPGRADE TO BUY. Silverlake Axis (SAL) has signed a non-exclusive licensing agreement with Silverlake International Capital Market Solutions Limited for its back-end Silverlake Integrated Banking Solution software platform. Under the deal, SAL will also receive US$7.35 million ($10.7 million) in license fees, which SAL expects to have a positive impact on its FY2008 earnings. This deal will bump up our FY2008 revenue estimate by nearly 15.7% to RM182.1 million ($79.05 million), our net profit estimate will get a larger 18.7% boost to RM108.0 million. Our fair value also improves from 71 cents to 83.5 cents, although still based on 20x FY2008F earnings. - OCBC Investment Research (Oct 23)

Elec & Eltek Int'l (Oct 25: US$1.97) TP: US$3.32
MAINTAIN HOLD. We expect yield issues at Elec & Eltek's (ELEC) Kaiping plant to have improved further in 3Q2007, but do not think they have been completely resolved. We expect marginal improvement of GPM (gross processing margin) to 16 % in 3Q2007 (15.3 % in 2Q2007), and estimate revenue of US$141.8 million (flat y-o-y, + 7.6% q-o-q) and net profit of US$8.7 million (-47.3 % y-o-y, + 21.5 % q-o-q) for the third quarter. We expect a payout ratio of 60% or 10.9 US cents for FY2007, or 5.6% net yield on the latest close, although we suspect full-year net dividend could be higher than our estimate. We retain our fair value of US$3.32 based on 10x FY2008E EPS. - CPhillip Securities Research (Oct 25)

Miyoshi Precision (Oct 25: 24.5 cents) TP: 31 cents
BUY (initiating coverage). Miyoshi Precision, a manufacturer of top covers for HDD, offers an opportunity to ride the growth potential of the other OEM HDD makers, namely the Japanese makers such as Hitachi CST. Miyoshi posted a very positive set of 1H2007 results ended Feb 28, with revenue up 25.7% y-o-y and 19.6% h-o-h at $81.7 million, while net profit jumped 81 % y-o-y and 61.8% h-o-h to $6.8 million, aided by strong demand from its Data Storage segment. Miyoshi also branching out into other areas to tap the growing demand for metal stamping and precision engineered components. Fair value estimate of 31 cents based on undemanding 9x FY2008 earnings. - OCBC Investment Research (Oct 23)

Sim Lian Group (Oct 25: 71.5 cents) TP: $1.03
BUY. The outlook of the local residential property market is expected to remain positive. The buoyant interest bodes well for Sim Lian Group (SLG) which has land parcels for the development of mid-tier and mass homes. We favour SLG for its strong balance sheet which enables the Group to embark on development projects single-handedly, providing management with nimbleness in decision-making. ROE is attractive at about 30% (FY2006/2009). Taking into account the launch of four projects in Singapore and two in Malaysia, SLG is valued at RNAV per share of $1.03. At 71 cents, Sim Lian is trading at a steep 31 % discount to valuation. - NRA Capital (Oct 24)

Frasers Centrepoint Trust (Oct 25: $1.49) TP: $1.96
MAINTAIN BUY. For 4QFY2007, FCT announced a DPU of 1.67 cents (flat q-o-q) translating to a FY2007 DPU of 6.55 cents. Northpoint 2 (NP2) acquisition is likely in 4QFY2008. Anchorpoint will be fully opened in December 2007. Lowered FY2008E and FY2009E DPU estimates due to potential income decline during the AEI works at Northpoint. We have raised our target price marginally as future income stream (post-AEI) from NP will more than offset the decline, and we have also factored in the NP2 acquisition. FCT is worth some $2.03, including a 12-month DPU of 6.8 cents. Target price raised to $1.96. - Citigroup Research (Oct 22)

Nera Telecommunications (Oct 25:40 cents) TP: 54 cents
MAINTAIN BUY. Net profit of $3 million was 20% above our expectations of $2.5 million. Net profit was up 40% compared to recurring net profit of $2.1 million in 3Q2006. In 3Q2006, $28.78 gain came from divestment of Nera Electronics. Inventory although lower than 2Q2007, is relatively high and indicates strong topline for 4Q2007. We are likely to revise our earnings upwards for FY2007 and FY2008. Orders secured till date in FY2007 for transmission equipment are $130 million better than our estimate of $100 million. Target price of 54 cents is pegged at 15x FY2008 earnings based on peer average. - DBS Vickers Securities (Oct 19)

United Engineers (Oct 25: $4) TP: $6.16
OUTPERFORM (initiating coverage). UE is known for its infrastructure engineering and facility management capabilities. The group has been able to keep its order book at between $600 million and $1 billion in the last five years. We estimate that property development and investment properties will comprise 79 % of the group's end-CY2008 RNAV, with the rest lying in construction and engineering projects. UE paid out 50% of its earnings as dividends last year, representing a DPS (dividend per share) of eight cents. We expect payout this year to fall to around 25%. Target price of $6.16, based on end-CY2008 RNAV. - CIMB-GK Research (Oct 24)

Copyright
Disclaimer

Read More...

Summary only...

Black Monday

As anticipated, Singapore shares plunged 2.81% or 105.34 points. I'm not panicking as I have already liquidated most of my stocks. In fact, I'm looking to buy more; I'm currently looking at companies who will be posting good 3Q results and giving out dividends.

Several reports will be out this week which will determine the market outlook. In US, existing and new home sales will be released on Wednesday and Thursday respectively and China is also expect to announce measures to curb their overheating economy - another increase in interest rate?

If Dow drops another 100+ points tonight, expect another round of selling tomorrow.

Read More...

Summary only...

The Edge - Brokers' Digest (October 22 - October 28, 2007)

Cheung Woh Technologies (Oct 18: 28 cents) TP: 37 cents - 31 cents
MAINTAIN BUY. For the half year ended Aug 31, 2007, Cheung Woh's net profit rose 86.8 % to $4 million on the back of a 28.9% increase in turnover to $43.7 million. Owing to a less than proportionate increase in the cost of sales, gross margin improved 4.3 percentage points. Cheung Woh has recommended an interim dividend of 0.5 cent per ordinary share, five times the 0.1 cent paid out in the corresponding period last year. We are raising our earnings forecast for the year from $7.7 million previously to $9 million. Cheung Woh is currently trading at 8.4 times our FY2008 EPS estimate of 3.4 cents. Pricing Cheung Woh at a forward PE of between 11 and 12 times, we derived a 12-month target price range of between 37 cents and 41 cents. - SIAS Research (Oct 15)

Ezra Holdings (Oct 18: $7.25) TP: $8.05
UPGRADE TO BUY. Ezra Holdings surpassed market expectations with a record FY2007 net profit of $104 million, up 68 % y-o-y, while topline surged 98 % to $219 million. Its performance was boosted by its Offshore Support Services (OSS) business and rising chartering rates. Stripping away the net gain of $49 million from the dilution of its interest in EOC Ltd and other gains, Ezra's recurring net profit grew at a five-year CAGR of 73 % to $48.9 million. We believe the buoyant outlook, especially with current high oil prices, justifies a re-rating of the stock to 18 times FY2008 earnings. We are raising fair value estimate to $8.05, giving a potential upside of 15 %. - OCBC Investment Research (Oct 17)

Oculus (Oct 18: 38.5 cents)
UPGRADE TO NEUTRAL. Oculus has dropped initial plans to acquire hydropower plants in China in favour of a reverse takeover with Aretae Pte Ltd, an environmental solutions company, for $600 million via an issue of 1.2 billion shares at 50 cents each. Aretae is positioned to benefit from the implementation of the Kyoto Protocol in 2008. Management of Aretae has provided an EBITDA guarantee of not less than $50 million for FY2008 and FY2009. In addition, its current portfolio of projects is expected to generate 50 million metric tonnes of carbon credits, which are tradable and could be a potential booster to earnings. - DMP & Partners Securities (Oct 17)

China Auto Electronics Group (Oct 18: 73 cents) TP: $1.16
BUY (initiating coverage). China Auto Electronics designs, assembles and manufactures wire harnesses, connectors, moulds, crimping machines and electronic modules for the automobile industry. China Auto's net profit is anticipated to rocket 283 % y-o-y to 117.2 million renminbi ($22.77 million) in FY2007, due to strong operating leverage. Its net profit in FY2008 is expected to be further boosted by reduction in tax from 33 % to 25 % for Chinese companies. We project China Auto to achieve high net profit CAGR of 136% in our FY2007-2009 forecast. Our fair value on the counter is $1.16, using 15 times FY2008 PE and implying an undemanding 0.1 times PEG. - DBS Vickers Securities (Oct 16)

Golden Agri-Resources (Oct 18: $1.39) TP: $1.78
BUY (initiating coverage). Golden Agri Resources is the world's second-largest oil palm plantation company in terms of planted hectarage and the largest in terms of total landbank. Golden Agri is also top three in terms of oil yield. Valuation-wise, recent stock price outperformance has put it nearly on par with most large-cap peers. Nevertheless, given (i) its size, (ii) long-term growth prospects, (iii) foothold in Indonesia and (iv) bullish industry outlook, we are recommending Golden Agri as a core holding for exposure to the plantation sector. In terms of valuation, Golden Agri is trading at between 14 to -16 times PE based on earnings for the next two years. Target price of $1.78, based on 20 times FY2008 earnings. - OSK Research (Oct 17)

Sihuan Pharmaceutical Holding Group (Oct 18: 83 cents) TP: $1.35
MAINTAIN BUY. Sihuan entered into a sale and purchase agreement to acquire Shenzhen Sihuan Pharmaceutical from three independent parties for 60 million renminbi ($11.65 million). Shenzhen Sihuan recorded a net profit of 3.1 million renminbi for FY2006 and 8.5 million renminbi for 9M2007. The price of 60 million renminbi represents 19.6 times the net profit of FY2006. We expect net profit growth of 93.1 % and 34.1 % for FY2007 and FY2008. Based on our free cash flow to equity model with a discount rate of 12% and terminal growth rate 2 %, we derived a fair value of $1.35, which is 15.6 times of forward 12-month earning and 13.5 times of FY2008's earnings (45 % upside). - Phillip Securities Research (Oct 12)

ComfortDelGro Corp (Oct 18: $1.96) TP: $2.27
MAINTAIN BUY. Higher capex related to fleet upgrades, plus higher oil prices, have us fine-tuning earnings and reducing DCF fair value on ComfortDelGro. The company's overseas investments will drive near-term growth with recent acquisitions in bus and taxi operations in Australia and China, as well as the UK, likely to contribute more significantly to earnings in FY2007F and FY2008F. With the earnings cut and increased capex spend assumptions, our fair value now stands at $2.27 (previous: $2.65) based on DCF (method unchanged). Group ROE remains at 16%, while the dividend yield remains relatively attractive (5.6% for FY2007F, 4.4% for FY2008F). Implied upside is 16 %. - Nomura Singapore (Oct 18)

K-REIT Asia (Oct 18: $2.80) TP: $3.31
BUY (initiating coverage). Apart from Keppel Land's income support for One Raffles Quay (ORQ) till 2011, we believe the ORQ acquisition paves the way for potential injection of more prime properties under partial ownership from the Keppel Group. Almost 70% of K-Reit's total NLA (ex-ORQ) is up for renewal from FY2008 to FY2010. Free float is likely to improve to over 42.2 % from 27.9%. K-Reit offers a three-year DPU CAGR of 28.3 %, one of the highest among S-REITs under coverage. Our target price of $3.19 includes the acquisition of ORQ and other prime Singapore office properties from the Keppel Group. We estimate K-Reit is worth $3.31, including a 12-month distribution per unit of 12 cents. - Citigroup Research (Oct 17)

Singapore Press Holdings (Oct 18: $4.52) TP: $5.84
BUY. SPH reported recurring earnings (profit before investment income and exceptional items) of $434.2 million (+ 20.2 %). The maiden profit of $47.8 million from the sale of the Sky@eleven condominium was included in the recurring earnings. Excluding the Sky@ eleven contribution, recurring earnings would still have grown 7%. FY2007 full-year DPS of 26 cents is slightly below our forecast of 26.5 cents. The FY2007 dividend payout as a percentage of recurring earnings is about 96 %, lower than the 103 % figure for FY2005 and the 106% figure for FY2006. Nevertheless, we forecast DPS of 32 cents in FY2008 and have raised our target price from $5.39 to $5.84 (implied FY2008 dividend yield of 5.5 %). - Kim Eng Research (Oct 15)

Copyright
Disclaimer

Read More...

Summary only...

Hong Leong Finance

The Business Times
Published October 19, 2007

HLF: Firing on all pistons, no CDO shock
By SIOW LI SEN

WHEN Hong Leong Finance (HLF) posts its third-quarter results next month, it is likely to announce a special dividend to use up its tax credits before they expire at year's end.

Singapore's largest independent finance company is also expected to report good results, driven by strong loans growth and burgeoning fee income - and with no risky collateralised debt obligation (CDO) exposures to take the shine off its numbers.

Among big companies, HLF is one of a few to have unused tax credits left before they expire on Dec 31.

These credits - a legacy from the previous tax system - are a boon especially for retiree shareholders as many can claim a tax refund when dividends are paid to them by companies with these tax credits in hand.

Ng Wee Siang, a BNP Paribas analyst, said this week that HLF is believed to have unutilised tax credits of at least $100 million or 23 cents per share, translating into a potential net dividend yield of 5.9 per cent.

In a July 2005 interview with BT, HLF president Ian MacDonald said the company had more than sufficient tax credits left for a 75 per cent payout of profit for the next two years, which it did for its 2004 earnings.

In a statement earlier this year, HLF chairman Kwek Leng Beng said the use of its remaining tax credits would be considered in any future dividend payout. 'In deciding on the quantum of the distributions, the company aims to balance prudential considerations with the utilisation of Section 44 tax credit balance where possible before the cut-off date,' he said.

The company paid a special dividend of nine cents for 2006 and 15 cents in 2005.
HLF, with 28 branches islandwide, is on course to report strong Q3 results fuelled by a surging Singapore economy, and the benefits from efforts to expand its fee income business.

In addition, the third quarter will have a new source of net interest income from an acquisition in June. In that deal, it bought ABN Amro Bank's car loan portfolio for $405 million, boosting its total loan book by about 6.2 per cent.
The ABN Amro purchase augments the finance company's position as a major car-financing player here.

Fee income should continue to post a big jump as the company expands its range of services to its traditional small and medium-enterprise (SME) base, and sell more investment products to its niche heartlander customers.

In May, HLF launched a business current account for SMEs, becoming one of the few finance companies in the world to offer cheque-book facilities after the regulator gave it more leeway in providing financial services.

For the first half of 2007, net profit rose some 30 per cent to $57.7 million with a smart pick-up in fee income which jumped 177 per cent to $11.1 million.
The company also said in August when it announced its first-half numbers that it has no holdings of CDOs and/or asset-backed securities.

Many analysts expect the Q3 results of the three local banks - DBS, United Overseas Bank and OCBC Bank - to be clouded by some CDO-related losses.

HLF is often ignored by the bigger broking houses as its share market liquidity is deemed too low for their global clients. Its market capitalisation was $1.7 billion at yesterday's closing price of $3.88, which is about 9 per cent lower than the year's high of $4.26.

Still, because of its small size relative to the banks, HLF has merger and acquisition potential and some think its majority shareholders, the Kweks, are fully aware of this.

I have highlighted the important points in bold. Base on the target dividend of $0.23/ share, HL Finance should easily surge past the $4 mark but as past experience has taught me, I will not see a sudden spike in price but rather a gradual one because as mention in the article, liquidity is too low. Nevertheless, I will be keeping HL finance in my long term portfolio and will buy more if the market goes into a recession.

Read More...

Summary only...

Don't sell all your CPFIS-OA investments when purchasing a flat unless...

you have to fork out excess cash or your loan interest is high. The reason is simple, to have an excess buffer in the event of unforeseen circumstances e.g. retrenchment.

How much to keep as a buffer varies. As a general rule, the higher your loan amount is and/or the longer your repayment period is, the less buffer you should keep.

HDB has a monthly installment calculator that allows you to check how much to pay per month base on your loan amount and repayment period.

Consider this scenario: a $150K loan for 20 years and a $140K loan for 20 years using the HDB interest rate of 2.6%.

Using HDB's monthly installment calculator, the monthly payment will be $803 and $749 respectively. This is a difference of $54/mth or $12,960 for 20yrs. If we make use of this 10K to continue our investment at say 3.5% (base on CPF interest) compounded, we will have $19225.01 at the end of 20 years. Calculating backwards, your $10K investment will need an annual return of about 1.4% to break even. Surely, 1.4% per annum for 20yrs is not too hard to achieve.

Read More...

Summary only...

Day 1 - Time Management

I will be starting on setting a finance site and I will keep track on my progress here. It might be disruptive to some who are here solely with the intention on reading about stocks and investment but I believe there will also be people who benefit from my experience in setting up a web site on Finance and also some who will provide feedback and suggestions.

Before I can progress further, I will need to allocate time to this project. Time Management is especially crucial as I'm holding a full-time job.

My plan is as follow:
Weekday (approximately 4hrs)
8pm - 9pm: Finance Site
9pm - 10pm: Work
10pm - 10.30pm: Personal
10.30pm - 11.00pm: Work
11pm - 12am: Finance Site

Weekend - a total of 6hrs on Sat and/or Sun on Finance site.

Ideally, I will be spending 16hrs a week on my Finance site. However, I might not be able to achieve that every day, hence I have set myself a minimum of at least 8hrs a week. I'm not too sure how my progress will be with 8-16hrs spent each week but this is what I'm comfortable with now. If progress is really slow, I will have to find some way to squeeze out more time.

Until I find a tool that I can insert into my blog, I'll be tracking the number of hours spent each day on a sheet of paper.

Read More...

Summary only...

PSC Corporation Ltd

PSC closed at $0.455 today. Pretty disappointing if you consider that the last price before consolidation was $0.12. Hence after a 5:1 consolidation, I'm expecting about $0.60. Even if it is calculated base on $0.10 per share (figure used by PSC to calculate the rights issue price), I should still expect at least $0.50. However, I half expected that it will happen because trading on its share prior to its consolidation and rights has been low.

All is not lost though. Interestingly, Super Coffeemix has become a substantial share holder by purchasing shares through Goi Seng Hui. Super Coffee Mix and Goi Seng Hui are still increasing their stakes in PSC through open market purchase. It's not hard to guess the direction where PSC is going given the strong China roots of both Goi Seng Hui and Super Coffemix.

I'm waiting eagerly for PSC rights circular - I'm optimistic that its major shareholders including Super Coffeemix and Goi Seng Hui will exercise their rights fully which also means that the outlook for PSC is bright.

Read More...

Summary only...

The Edge - Brokers' Digest (October 15 - October 21, 2007)

Allco Commercial REIT (Oct 10: $1.14) TP: $1.65
MAINTAIN BUY. Allco has announced the acquisition of KeyPoint, a commercial asset located at the junction of Beach Road for $370 million. Based on the acquisition price, the asset is acquired at a net property income yield of 4.65%, with an income support of $10.5 million for a period of two years. Despite increasing its portfolio by 119% (excluding upward revaluations) since listing through third-party acquisitions, Allco continues to trade at a steep discount of 25% to book value, one of the cheapest SREITs offering an attractive yield of 6.3 %. Target price of $1.65 backed by DCF valuation. - DBS Vickers Securities (Oct 8)

Lian Beng Group (Oct 10: 59 cents) TP: 89 cents
MAINTAIN OUTPERFORM. Lian Beng Group (LBG) announced that it had clinched a $200 million construction contract to build 600 condominium units at Simon Road. This 189,811 sq ft URA site was awarded to newcomer developer, Duke Development Pte Ltd, on Oct 3 for $290 million or $437 psf per plot ratio. LBG's order book now stands at $575 million. We are upgrading our FY2008-2010 earnings estimates by 12 % -29 %. We expect FY2008 net profit to expand 232% y-o-y from $4.4 million to $15.5 million, driven mainly by its order book, margin expansion, property development profit recognition and new IR contracts. We maintain our target basis of 15 times CY2008 PE. Target price of 89 cents. - CIMB-GK Research (Oct 9)

Tsit Wing Int'l Holdings (Oct 10: 28 cents) TP: 30.5 cents
BUY (resuming coverage). Tsit Wing Int'l Holdings (TWI) has sought to grow via the Chinese market. We project revenue from TWI's China segment to grow by 60% for FY2007 and FY2008. TWI offers price stability with decent dividend yields. The stock has been hovering between 24.5 cents and 30.5 cents over the past year. We expect TWI to maintain a dividend payout ratio of 60 % for FY2007 (implying a dividend yield of 8.1 %) and still enjoy a comfortable net cash position for its expansion plans in China. Fair value estimate of 30.5 cents, based on eight times blended FY2007/2008 PER (or a 12 % potential upside from current price). - OCBC Investment Research (Oct 9)

Asia Environment Holdings (Oct 10: 76.5 cents) TP: $1.06
UPGRADE TO BUY. Asia Environment (AENV) recorded a 7% increase in revenue to 150.8 million renminbi ($29.42 million) in 1H2007. The management attributed this growth to the increase in build-operate-transfer (BOT) projects and the sales of equipment, which amounted to 5.5 million renminbi and 3.6 million renminbi, respectively. Gross profit increased by 9 % to 51.2 million renminbi in 1H2007 while gross profit margin improved slightly to 34 %. Net profit rose smartly by 22.1 % from 22 million renminbi to 26.9 million renminbi in the same period. At 77 cents, the counter is now trading at 13 times FY2008 forecasted earnings. We are pegging our target price at 18 times FY2008F earnings, which would give us $1.06. - SIAS Research (Oct 8)

MacarthurCook Industrial REIT (Oct 10: $1.21) TP: $1.39
MAINTAIN BUY. MacarthurCook Industrial REIT (MIREIT) announces its third acquisition since its IPO, bringing the total value of announced acquisitions to $126.1 million. MI-REIT completed the acquisition of 541 Yishun Industrial Park A on Oct 4. With an acquisition target of $500 million annually, we believe there will be more announcements coming up. We revise our revenue to factor in the contributions from the latest acquisition. Our forecasted distribution per unit increases to 7.48 cents for FY2008 and 7.96 cents for FY2009, translating to a yield of 6.33 % and 6.74 %. Our fair value remains at $1.39, derived from our DCF model. - Phillip Securities Research (Oct 5)

Unisteel Technology (Oct 10: $1.99) TP: $2.42
UPGRADE TO BUY. Unisteel Technology has benefitted from an uptrend in seasonal demand. Its HDD segment is expected to see a strong recovery in 2H2007. Revenue contribution from its new acquisition, JC Metal, and a wider adoption of Uni-Lube coating will improve its margin in 2H2007. In fact, capacity utilisation at Unisteel for HDD fasteners improved from 70% in 2Q2007 to 90 % -95 % in 3Q2007. JC Metal's total revenue is expected to top $70 million in FY2007, and its FY2007 revenue contribution to Unisteel is estimated at $27 million as JC Metal will only contribute five months of revenue. Our target price is $2.42, or 2008 PE of 15 times. - UOB KayHian (Oct 5)

China Sky Chemical Fibre (Oct 10: $2.48) TP: $3
MAINTAIN BUY. We recently visited China Sky Chemical Fibre (CSCF)'s plant in Quanzhou and noted a few developments one being the strong expected demand for super-resilient (SR) nylon fibre. An acquisition deal could be inked by year-end after the ironing out of issues that dragged negotiations. CSCF has started processing pre-oriented yarn into air-textured yarn and drawn-textured yarn for customers since June. Rolling forward our valuation to FY2008 earnings, our fair value is raised to $3 (potential upside of 20 %) on sector average forward PE of 15 times. Strong earnings contribution expected from the new SR products in 2Q2008 and strengthening of market leadership position through M&A justify the enhanced valuation. - NRA Capital (Oct 9)

Sing Holdings (Oct 10: $1.17) TP: $1.64
BUY (initiating coverage). Sing Holdings is a boutique developer with more than 40 years' experience in the Singapore property market. The company has a landbank of about. 500,000 sq ft in gross floor area, which is capable of being developed into mid to high-end residential developments. Sing Holdings may be relatively small, but it has established a good standing with a number of illustrious names. The proposed sale of EastGate is expected to generate proceeds of about $60 million. Target price of $1.64, representing a potential upside of 56%. We think that the company is undervalued (FY2008 PER of 3.5 times), despite its proven track record of delivering quality products and exciting prospects. - Kim Eng Research (Oct 4)

United Overseas Bank (Oct 10: $22.30) TP: $27.50
MAINTAIN BUY. We like United Overseas Bank (UOB) for its domestic exposure, especially in the housing loan market complemented by its diversified regional presence. We believe that UOB is poised to deliver sustainable earnings from stronger loan growth. Positive surprises could arise from its regional network, especially in Thailand. We estimate 3Q2007 net profit to grow by at least 20 % y-o-y. Non-interest income to remain strong for FY2007, built up from 1H2007. We expect UOB to pay total (gross) DPS of 80 cents, of which 35 cents was paid during 2Q2007. Target price of $27.50 based on the Gordon Growth Model. This yields an implied 2.1 times FY2008 adjusted book value, based on peak valuations. - DBS Vickers Securities (Oct 5)

CSE Global (Oct 10: $1.31) TP: $1.60
MAINTAIN BUY. According to E-Health Insider (EHI), the Fujitsu Cerner Module has been disappointing and implementation has been plagued by delays. This raises the prospect that CSE can benefit from Fujitsu's failure to deliver its obligation on schedule for the Southern cluster. A contract re-negotiation is positive for CSE. EHI reported that several trusts in the Southern cluster are in favour of adopting CSE's RiO solution. At $1.29, CSE is currently trading at around 13 times 2008E PE, with our target price of $1.60 representing an expected total return of 27 %. New contract wins from the Southern cluster as well as the oil and gas sector could add upside surprises to our 2008E forecasts. - Citigroup Research (Oct 5)

SSH Corp (Oct 10: 40 cents) TP: 60 cents
BUY. SSH trades in and distributes more than 15,000 line items such as stainless steel, steel pipes and top-quality valves to the marine, petrochemical, infrastructure and oil and gas sectors. In January last year, SSH established a new business unit to supply steel plates and structural steel tubular pipes to the oil and gas industry. The order book currently stands at $38 million, with deliveries in May 2008. We believe that SSH's sizeable contract win worth $80 million from Shell Houdini would open up numerous potential business opportunities, including ExxonMobil's cracker. Our target price of 60 cents is based on 15 times PER FY2007/2008F blended earnings. - OCBC Investment Research (Oct 8)

Valuetronics Holdings (Oct 10: 30.5 cents) TP: 47 cents
MAINTAIN OUTPERFORM. The company is on track to report record quarterly earnings next month. Order flow from major customers remains good, with the exception, of KitchenAid. Business momentum is coming from a combination of organic growth and new programme wins. Valuetronics has also been securing new customers, though contributions remain small. We have kept our FY2008FY2010 net profit forecasts intact. At 2.4 times EV/EBITDA, the stock remains cheap against its competitors, and offers a yield of 6 %. Our target price of 47 cents conservatively pegs the stock at a low eight times CY2008 PE, despite its high ROES and strong balance sheet to account for its small size and lack of a listing track record. - CIMB-GK Research (Oct 9)

HTL Intl Holdings (Oct 10: 84 cents) TP: 47 cents
MAINTAIN SELL. 2Q2007 gross margins hit its lowest for more than two years, dropping below the 30 % mark for the. first time since 3Q2004. The margins were largely affected by the increase in raw leather hides prices, exacerbated by a 5 % reduction in the China export VAT refund rate. On the macro front, subprime woes will likely affect the US housing market and demand for furniture goods. At the company level, it continues to face an uphill struggle to maintain margins. We have further downgraded our earnings by just 30% to factor in increases in raw material prices and freight costs. Keeping our eight times FY2008 PE valuation, our new target price is 47 cents. - CLSA Asia-Pacific Markets (Oct 5)

StarHub (Oct 10: $3.10) TP: $3.64
MAINTAIN OUTPERFORM. Singapore's population boom (+4.4% y-o-y) on immigration influx and wage growth ( + 8 % y-o-y) helped drive Singapore's mobile and broadband penetration rates to 113 % and 75 %, respectively, in July. We reiterate our view that StarHub offers the best exposure to Singapore's telco services consumption growth story. We reiterate our view that consensus is due to upgrade its 5.6% CY2008 yield expectations towards our expectation of a 10% yield. Upgrading target price to $3.64 as we roll forward our DCF valuation (WACC: 6.9 %, terminal growth: 1 %) to CY2008 basis. Starhub is our preferred Singapore telco pick over the next 12 months. - CIMB-GK Research (Oct 5)

Yangzijiang Shipbuilding Holdings (Oct 10: $2.61) TP: $3.04
BUY (initiating coverage). Yangzijiang is the largest private containership builder in China and among the Top 10 in the world. Backed by a record order book of 35.8 billion renminbi (or $6.97 billion), representing nine times its FY2007 revenue, this underpins earnings visibility till FY2010. Yangzijiang's FY2009 earnings will capture the full impact of the new shipyard. The recent re-rating of regional shipyards, led to a doubling of PE to 24 times on FY2008 earnings. We have imputed a target PE of 28 times on FY2009 earnings for Yangzijiang, which is in line with the industry average of Singapore and China-listed peers. This will give rise to a 12-month forward valuation of $3.04. - DBS Vickers Securities (Oct 8)

Copyright
Disclaimer

Read More...

Summary only...