Towards Financial Freedom
DBSV S'pore Wired Daily 3 August 2012
Today's Focus
NOL - Outlook stabilizing; upgrade to HOLD with TP of S$1.23.
Hyflux - Downgrade to HOLD on limited upside to revised TP of S$1.45 after earnings cut.
Results for NOL are set to improve in 2Q, driven by higher freight rates and lower bunker fuel prices. Risk of gradual decline in rates remains amidst a benign demand environment currently. The unfavourable containership demand-supply mismatch continues to pressure rates, but we are looking for a gradual slide downwards in 2H12 at worst, unlike the sharp fall last year. Aided by cost saving initiatives, NOL should record at least sub-par profits in 2H12/ FY13. Upgrade to HOLD with TP of S$1.23 (Prev S$ 1.00).
Hyflux's 2Q12 results trailed expectations because of weak margins for Singapore and higher costs in Magtaa. Ongoing operations are on track; Hyflux still bids actively in the MENA region. Our analyst has cut FY12/13F earnings by 30%/27% to account for lower sales and weaker margins. Downgrade to Hold on limited upside to reduced TP of S$1.45 (Prev S$ 1.66).
2Q12 results for Sembcorp Marine were below; weak margins hurt by forex translation losses. Order pipeline robust, 2012 could be record year. FY12F earnings cut by 8%; our analyst expects a stronger 2H12 and FY13. Maintain BUY and TP of S$5.85.
China is proposing free use of toll roads during major public holidays. Macquarie Int'l Infrastructure Fund's (MIIF) 81% owned Hua Nan Expressway (HNE) in Guangzhou will be affected, once these new regulations come into force. On a full-year basis, our analyst estimates an impact of 5% on topline and close to 10% on the bottomline. The impact of this event on MIIF's distribution income will be limited in FY12/13, since current year distribution income for MIIF from HNE relates to past year profits. With the regulation likely to materially affect HNE's earnings from FY13 onwards, MIIF's total distribution income will likely to be affected by about 2-3% from FY14 onwards. Distributions from HNE will account for about 33% of total income for MIIF in FY12, but this may go down to only 20% by FY14, following the cut in toll rates in June and potentially lower toll days now. Current Buy call and TP of S$0.62 under review, pending 2Q results release and management briefing next Tuesday.
Ezion has secured its third project in Queensland, Australia, worth an initial US$71m for the provision of full logistics and support services for the development of LNG facilities on Curtis Island in relation to the Australia Pacific LNG project. This project is scheduled to commence in early 2Q 2013 and will take place over 20 months. This contract brings Ezion's YTD contract wins to c. US$695m, a record intake.
ComfortDelgro has embarked on an A$53m acquisition in Australia, a move that will cement its Australian subsidiary's position as the largest private bus operator in the country with a total fleet of more than 1,500 buses. The consideration is about 6.8 times Ebitda (earnings before interest, taxes, depreciation and amortisation).
BBR Holdings has won a S$153.1m contract from Ascendas Land to design and construct a mixed-use development at Fusionopolis Place in the Buona Vista area. Its current order book stood at approximately S$773m with projects lasting up to 2015.
Memtech International expects a loss for 2Q12, mainly due to significantly lower demand for mobile phone keypads.
Eucon Holding is expected to report a loss after taxation for FY Dec 2012, mainly attributable to slowdown in demand for all business segments, coupled with increasing labour and materials costs faced by its China subsidiaries.
Oakwell Engineering expects to report a net loss for 1H2012 due mainly to the Shipbuilding segment. The Shipbuilding segment is expected to post a net loss for 1H2012, as a result of delays in the delivery which led to higher-than-expected costs incurred for the group's first survey vessel project.
Linair Technologies expects to record a consolidated net loss after tax for 1H2012 due principally to the need for further impairment as a result of deteriorating operating conditions in China faced by its Suzhou subsidiary.
US and European markets sold off after ECB President Mario Draghi failed to come out with immediate efforts to bolster the economy. Draghi signalled the ECB intends to join forces with European governments to support bonds and conceded that Germany's Bundesbank had reservations about the plan. He said wait for the details to be released in coming weeks and while waiting, investors locked in gains from last week's rally. The week ends with the release of US July employment data this evening. Consensus calls for a non-farm payrolls of 100k and unemployment rate of 8.2%.
Source: DBSV
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
