Towards Financial Freedom
DBSV S'pore Wired Daily 15 August 2012
Today's Focus
City Developments - Getting expensive, downgrade to Fully Valued; TP S$11.42.
2Q results for City Developments were dragged by timing of residential billings and lack of one-offs. Going forward, residential profit would be supported by locked-in sales to drive earnings but margins are likely to narrow. Our analyst is downgrading City Dev to Fully Valued on valuation grounds as the stock is trading at a premium to revised TP of S$11.42 (Prev S$ 10.85). While we like the group's quick asset turn strategy, we would be buyers of the stock on weakness.
2Q12 net profit for Wilmar was US$117.1m (-70.2% y-o-y; - 54.2% q-o-q) - significantly below our expectations of US$280-320m. The main differences were:
1. US$40m loss in oilseeds and gains vs. US$15.9m profit expectation,
2. palm & lauric M&P pretax of US$160m vs US$256m expected,
3. plantation pretax of US$79m vs. expectation of US$114m
4. US$26.5m realised and unrealised loss in investments securities due to weaker global equity markets ' against US$45.7m gain in 1Q12, and
5. FX loss of US$19.7m from intercompany loans Will provide more details after briefing today.
First Resources reported 2Q12 net profit of US$50.7m, representing a 38% y-o-y and 4% q-o-q increase. Excluding FX/derivative gains of US$6.8m the result was in line with our US$41-46m expectations. With 2Q12 in line with expectations, we maintain our HOLD call. While we are still positive on First Resources' long term growth prospects, we recommend investors to lock in gains, on expectations of moderation in CPO prices near term. Will provide more details after briefing today.
Midas reported 2Q12 results that missed our expectations, primarily due to the poor performance of associate Nanjing Puzhen. Still, we believe that investors should be less focused on 2012 results, and instead look at the prospects of the Group in 2013 and beyond, which we believe will improve in the coming months as China restarts its high-speed railway program. Technically, we continue to see upside potential to $0.48 in coming month(s). Support is strong at $0.31. Will provide more details after speaking with management.
Separately, Nanjing Puzhen announced that it has won two PRC metro contracts worth a combined RMB1.4 bn. The first contract is awarded by Wuxi Rail Transport Development, for the supply of 23 train sets (1 train set = 6 train cars), or 138 train cars, for the Wuxi Metro Line 2 Project. Delivery for this contract is slated to take place from 2013 to 2014. The second contract is awarded by Hangzhou Metro Group, for the supply of 27 train sets (1 train set = 6 train cars), or 162 train cars, for the Hangzhou Metro Line 2 Project. Delivery for this contract is slated to take place from 2013 to 2016.
Sembcorp Marine has secured a contract worth US$135m to reconstruct a semi-submersible rig for Diamond Offshore Drilling, to be delivered in the second quarter of 2014. This project could pave a new wave of demand for reconstruction projects, as it shortens the delivery period from 36 to 24 months and will be re-built at a significantly lower project cost of US$370m(including equipment), resulting in savings of 30% to 40% vs building a new rig.
Diamond Offshore has two more semi-subs and 1 jack up under cold stack. With this project, total YTD order win for SMM is S$8.3b, raising order book to S$11.7b. We continue to favour SMM for strong earnings visibility of 2.4x in terms of book to bill, with projects stretching up to 2019. Maintain Buy, TP: S$ 5.85.
ST Engineering's 2Q12 net profit of S$143m (up 10% y-o-y) was slightly ahead of our estimates; margin improvements were seen across all segments. STE's record orderbook of S$12.7bn provides healthy earnings visibility. Coupled with strong balance sheet and healthy dividend yield of 5%, we maintain BUY call with higher TP of S$3.60(Prev S$ 3.40), as our PE multiple is revised upwards to 18x to reflect mid-cycle valuations.
Operational ramp ups and revaluation gains for Global Logistic Properties lift 1Q13 earnings. Leasing and J-Reit catalysts still intact; maintain Buy, TP raised to S$2.61 (Prev S$ 2.31).
2Q12 results for Sound Global were in line, 1H12 met 42% of FY12F. Orderbook remains sturdy at RMB2.5bn, and this is expected to drive growth. Maintain Buy, no change to forecast and TP of S$0.86. Operationally, we are positive on Sound Global's business outlook as the long- term trend of the water industry in China is buoyant. However, near term share price performance may be affected by the outcome of the CB redemption.
1H results for Yanlord Land were above forecasts with margins that met expectations. Contracted sales momentum in 2Q continued in July and probably August too. The group has managed to delay land premium payment to maintain net debt ratio at at below 50% by end-FY12. Maintain HOLD, TP revised up to S$1.24(Prev S$0.99).
Excluding a S$10m one-off gain, 2Q12 core profit of S$11.1m for CSE Global was broadly in line. An interim dividend of 1.5 Scts was declared (as expected). New order win of S$115m was below our S$130m-150m estimate due to delay in awards but the company expects major order wins in September. Official guidance for FY12F core profit to be similar to FY10 lends credence to our estimates. Maintain BUY with S$0.90 TP based on 9x FY12F PE.
STX OSV's 2Q12 net profit of NOK 279m (+3% y-o-y) in line with expectations. Order-win momentum is healthy. We estimate that total order intake YTD in 2012 amounts to about NOK7.7bn, forming close to 80% of our full-year order-win assumption. The order backlog at the end of 2Q12 stood at NOK18.3bn, comprising 55 vessels, and translating to a healthy book-to-bill ratio of 1.5x. A special dividend of 13Scts for 1H12 was declared, implying attractive interim yield of >8% at current prices; Maintain BUY and S$2.00 TP.
US markets gave up early session gains to end on a mixed note as technical and financial stocks eased. Stocks had initially firmed after July retail sales climbed more than expected (actual 0.8%, consensus 0.3%).
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....
