Towards Financial Freedom
DBSV S'pore Wired Daily 14 May 2013
Today's Focus
Take profit on Singapore banks
Goodpack - Await demand recovery, downgrade to HOLD with lower TP of S$1.90
Singapore banks have rallied strongly after the release of 1Q13 results. But our banking analyst believes this is as strong as it could get fundamentally. All eyes will remain on NIM for any upside surprises as other P&L levers are largely stretched. Consensus has raised earnings expectations to show 1% growth from 1% earnings contraction before. We are keeping our 3% earnings growth projection for 2013. Expect some consolidation in the near term; take profit. We believe regionalization efforts would re-rate the Singapore banks in the longer term. Maintain HOLD on OCBC; TP at S$11.50. We have a Fully Valued call on UOB, TP S$20.10.
3Q13 bottomline for Goodpack was below on lower fleet expansion and Intermediate Bulk Containers (IBC) turnaround. We have trimmed FY13/14F estimates by 3%/7% on slower demand recovery. Nevertheless, we remain optimistic on Goodpack's fundamentals and growth prospects from FY14 on the back of market share gains in synthetic rubber (SR, especially in Russia and Singapore) and autopart segments. While earnings are expected to grow 19% q-o-q going into the seasonally stronger 4Q with contribution from non-rubber products and maiden Russian SR sales, we would like to await macro and industry data for cues. Downgrade to HOLD, with a lower TP of S$1.90 (Prev S$ 1.95).
Nam Cheong's 1Q13 earnings were up 8% y-o-y to RM36m, largely in line. The pace of vessel sales is ahead of expectations. The latest new vessel sales contracts for 5 vessels worth US$110m improve revenue visibility further. FY13/14F earnings were raised by 4%/14%. The Group remains well on track to deliver on its newbuild programme of 19 vessels in FY13 and 25 vessels in FY14, underpinning net profit growth trajectory of 20% CAGR over FY12-14. Maintain BUY with higher TP of S$0.36 (Prev S$ 0.30).
1Q13 core net profit of Rp151.5bn for Bumitama Agri made up only 15% of our initial FY13F. High cost of logistics and jump in third party FFB pushed costs up. FY13F/14F/15F earnings cut by 13%/6%/3%; TP lowered to S$1.12 (Prev S$ 1.18). HOLD maintained for 11% upside to revised TP.
First Resources reported 1Q13 core net profit of US$63.6m (+25% y-o-y; -17% q-o-q). This represented 35% of our full year forecast - ahead of expectations. Despite the strong results, we are putting our forecasts under review due to lower than expected yields. Will provide more updates.
1Q13 earnings for Super Group were in line, driven by higer gross margins and ingredients segment. FY12-FY14F 20% CAGR growth will be supported by Branded Consumer and Food Ingredient segments. Maintain Buy with higher TP of S$5.35 (Prev S$ 4.68).
1Q13 earnings for City Developments dipped 12% y-o-y, and account for 20% of our full year forecast. The drag came largely from lower residential and hotel revenue. Looking ahead, residential activities offer visible earnings stream while hotel operations continue to face challenges. Maintain Hold, TP S$12.33.
Wing Tai reported 3Q13 net profit of $94.6m, bringing 9M13 bottomline to $255.3m, ahead of our expectations. Looking ahead, the group plans to market The Tembusu, a 337-unit freehold development along old Tampines Rd in the coming months. In addition, the group has another project along Prince Charles Crescent (JV with UEL, Metro) that is scheduled to be marketed in coming months. This provides earnings and cashflow visibility for FY14. Current TP of $2.33 under review, likely to remain Buy with a slightly higher TP.
Cordlife Group reported net profit for 9M13 more than doubled to S$9.7m from S$4.6m for the previous year (9M12). The Group achieved its bottomline increase on the back of year-on-year revenue growth of 11.6%, which was driven by a rise in the number of client deliveries. Excluding the S$2.7m gain from the disposal of its 10% interest in China Stem Cells, the Group achieved a 51.8% growth in net profit at S$7.0m, in line with higher sales achieved in 9M13. Gross margin maintains at high, consistent level of 69%. Going forward, the Group remains confident of its performance, as it continues to leverage on its market position and brand equity and ride on positive industry momentum.
China's April industrial production (actual 9.3% y-o-y, consensus 9.4%) and FAI (actual 20.6% y-o-y, consensus 21%) came in a tat below expectations while retail sales (12.8% y-o-y) was in-line. Market reaction to the data was muted with the SSEC down a marginal 5pts. This latest data set is unlikely to result in investors taking on risk or swing interest towards cyclical and commodities. We maintain our technical view that the SSEC should base build at levels slightly above 2150, awaiting catalysts for a rise to 2440 followed by 2624 over the course of the year.
Source: DBSV
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