STOCK IN FOCUS
SAKARI RESOURCES LTD 
Good qoq improvement in sales and cost management. There was a 26% qoq increase in sales to US$238mil, with a 66% qoq increase in PATMI to US$23.9mil. Net margins inched up to 10.1% from 7.7%. This is attributable to lower cash costs which fell 11% qoq and an ability to maintain ASP of US$94.5, similar to 1Q's despite coal prices falling 15% in 2Q.   The latter surprised strongly on the upside, and was achievable with the use of 'nancial derivatives.

One'o' items'income tax expenses and derivative gains. Unexpected increase in income tax expenses put a slight damp on 2Q earnings. Sakari's e'ective tax rate for 2Q was 49%, compared to our estimates of 28%. These additional taxes were attributable to additional assessments for prior years' taxes. We raise our e'ective tax rates to 36% for FY12, in line with new guidance. On the other hand, marked'to'market gains from derivative 'nancial instruments contributed US$9.6mil of unrealised gains on the P&L.  Slow 1H met circa 30% of our FY12F earnings estimates, but 2H will be stronger. Sakari had planned for a slow 1H, which we had earlier expected to be in the region of 35'40% of entire FY12F's earnings to be garnered in 1H 2012. Over the teleconference, the management mentioned that Sakari had higher planned shipping rates in 3Q to sell its inventory stockpiles which are at 3'year highs of US$33.9mil. With that, we are fairly comfortable that 2H will be strong, meeting our full year earnings estimates.

2c dividend declared. Based on its dividend policy, Sakari declared a 2c dividend on 60% payout ratio. This translates to a 3.1% annualised yield based on last close.

Downgrade to HOLD, maintain FV of S$1.46.  Our FV remains unchanged based on 10x FY12F earnings. As current price levels and our FV have narrowed such that total potential return drops below 15%, we downgrade Sakari to HOLD on less attractive risk'reward ratio. In addition, channel checks suggest that destocking in China is still slow, indicating that stabilization of coal prices may be pushed out further into the future'another reason to HOLD.  



NEWS BUZZ
Thai Beverage (S$0.32) 
Raises F&N stake to 24.1%
Thai Beverage bought 3mil F&N shares through married trades on July 25 to raise its deemed interest in the conglomerate to 24.1%.

Saizen  Real Estate Investment Trust (S$0.154) 
Buys Cosmo Reveur Sangenjaya in Tokyo
Saizen Real Estate Investment Trust's TK operator Yugen Kaisha Kokkei hasmacquired Cosmo Reveur Sangenjaya (CRS) in Tokyo for a cash consideration of 589.99mil yen (S$9.4mil). There is no issuance of new units to raise equity for the acquisition, which is accretive to Saizen Reit's DPU. Based on a valuation as at July 27, 2012, prepared by Le Futur Corporation, an independent valuer commissioned by the manager, CRS is valued at 593mil yen.

Singapore Exchange (S$6.69) & Securities Investors Association (Singapore)  
Take investing to the masses  
In its bid to woo retail investors, the Singapore Exchange (SGX) unveiled a  tie'up with the Securities Investors Association (Singapore) (SIAS) to take 'nancial literacy to the heartland. The 'rst joint initiative by SGX and SIAS  '  the inaugural Singapore Investment Week 2012  '  will enable members of the public to learn more about investing through investment seminars, online videos and radio programmes from Aug 25 to 31. SGX also launched an online investing competition, StockWhiz, which it hopes will be an e'ective pla''orm for investors to test their newfound knowledge.
Source: The Business Times

Source: AmFraser