Towards Financial Freedom
DBSV S'pore Wired Daily 13 August 2012
Today's Focus
Breadtalk - Margins disappoint, downgrade to Hold, TP cut to S$0.62.
Mewah - Hit by de-stocking again, downgrade to Fully Valued, TP lowered to S$0.38.
STI's pullback off the 3100 resistance may have started last week. The pullback should find support at either 3000, at worst 2930. Post pullback back, look for the STI to resume its climb. A subsequent break above 3100 sends it towards but not likely to exceed 3200. For now, immediate resistance is at 2970.
Malaysia's Jul12 palm oil output rose 15% m-o-m to 1.692m MT, backed by a 2-5% improvement in FFB yields in Johor and Sarawak. However, YTD FFB yield still averaged 12% below last year's. Reflecting this, our analyst has cut CY12F output to 18.4m MT from 19.1m MT previously. End-Jul12 stock level jumped 18% m-o-m to 1.999m MT, as exports to China and India dropped. Accumulate Bumitama (BUY, TP: S$1.35) on weakness, as it should continue to outperform peers due to higher long term volume growth expectations.
2Q12 results for Breadtalk Group below expectations on weaker margins despite strong revenue growth. Interim DPS of 0.5 Scts was declared. Our analyst has cut FY12F/13F earnings by 19%/28% on lower margin assumptions, TP revised to S$0.62 from (Prev S$ 0.72). While we recognize the group's strong topline growth, recognisable brands and concepts, we believe more time is needed for it to be translated into credible net profit growth. Downgrade to Hold.
Mewah's 2Q12 earnings dropped 24% q-o-q to US$6.3m ' below expectations on annualised basis. Continued de- stocking dragged Consumer Pack volume and operating profit by 6% and 26% q-o-q, respectively. FY12F-14F earnings cut by 10-19% on lower Consumer Pack contribution and higher expenses. Downgrade to Fully Valued, TP lowered to S$0.38 (Prev S$ 0.46).
Results for Genting Singapore were below expectations, dragged by rolling chip contraction, lower VIP win rate and lower margins. Positive impact of Western Zone, however, is expected to be felt from 2Q13 onwards. Overhang from slower growth, policy risk and potential bidding war for Echo remains. Earnings for FY 2012-14F cut by 3-6%; maintain Hold and S$1.17 TP.
3Q12 core profit for F&N was below expectations. Brewery and dairies posted growth while earnings from soft drinks and property development declined. Earnings for FY12F/13F trimmed by 7.3%/ 0.6% to reflect slower earnings contribution from its property development, as well as softer margins on its soft drinks division. Attention remains focused on offer from Heineken and Kindest Place Group for APB shares. Maintain Hold and S$8.99 TP.
2Q12 results for ARA Asset Management in line, underpins a resilient set of earnings. ARA has raised US$1bn in 2 private funds in the quarter amidst market uncertainty. BUY call maintained, TP adjusted slightly to S$1.72 (Prev S$ 1.74).
Results for UOL in line, residential and revaluation slack partly offset by hotel and leasing income. Better 2H outlook in anticipation of new residential billings. Maintain Buy, TP raised to S$5.96(Prev S$ 5.28), after updating the value of its investment holdings. We continue to like UOL for its multi growth engines that provide stability to RNAV as well as management's prudent approach in the residential sector.
Otto Marine is expected to report a loss for 2Q12, largely due to, amongst others, the following: (i) lower utilization of the ship yard mainly due to less new orders being secured; (ii) losses from its seismic division mainly due to lower utilization of its seismic vessel; (iii) foreign exchange losses resulting from the net negative movement of EUR against USD and SGD against USD; and (iv) the potential impairment of its investment in certain investee companies.
Raffles Education is expected to report a loss for FY12, due to provision for the loss on disposal of the land use rights, impairment of goodwill and restructuring of its Vietnam operations.
Tiger Airways operating statistics for July 2012. Both Tiger Singapore and Tiger Australia recorded a healthy load factor of 84% in July 2012. Tiger Australia, gradually recovering from the flight suspension a year ago, carried 193,000 passengers in July 2012, 40% more than in June 2012. For the 12 months to July 2012, passenger carriage on Tiger Singapore improved 23% y-o-y to 3.9m passengers, a result of the significant injection of capacity over the past year. Tiger Australia carried 1.4m passengers, a decrease of 53% compared to the preceding 12-month period as a consequence of the suspension of its services by the Civil Aviation Safety Authority of Australia between 2 July 2011 and 11 August 2011.
Sakari Resources has commenced coal exploration activity over an initial area totalling approximately 100,000 hectares in Cambodia. It has also signed a Heads of Agreement (HOA) to acquire a 100% interest in up to six coal concessions in Indonesia, covering an area of over 29,000 hectares, located some 30km to the north of Sakari's Jembayan Mine in East Kalimantan.
Singapore's non-oil domestic exports (NODX) growth slowed sharply in the second quarter and could weaken further, but growth is expected to recover by the end of this year. It also narrowed its forecast range for full-year growth in both NODX and total trade to 4-5%, from 3- 5% previously. NODX grew by 3.9% y-o-y in Q2, much slower than the 6.1% growth in Q1, hurt by a fall in exports to the US and China. Compared to the first quarter, NODX shrank at a seasonally adjusted, annualised rate of 3.3%, reversing the previous quarter's growth of 8.6%. For the first six months of 2012, NODX grew 5% y-o-y, boosted mainly by Singapore's trade with Hong Kong, South Korea and Indonesia. NODX to the European Union, Singapore's biggest NODX market, was 2.4% higher in Q2 compared to a year earlier. But NODX to China and the US, the No 2 and No 3 NODX markets for Singapore, shrank, falling by 0.2% and 11.2% respectively. Domestic exports of electronics, which comprise 34% of NODX, expanded by 2.2% in Q2, slower than the 3.5% increase in Q1. Non-electronics domestic exports rose 4.8%, after growing 7.8% in Q1.
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....
