Towards Financial Freedom
DBS Equity Research: Wired Daily 2 Sep 2014
Valuetronics - Questioning value, target price lowered to S$0.65 but stock still offers 58% potential upside and trades at only 3.3x PE net of cash and >6% yield; maintain BUY
Valuetronics' Consumer Electronics (CE) segment was hit by its customer's strategy to enter mass market, while its Industrial's outperformance failed to offset the decline from CE, thus leading to flat margins y-o-y in its 1Q15 results. Going forward, growth is possible if CE stabilises and new Industrial customer ramps up further. However, erring on the side of conservatism, we have cut FY15/16F earnings by 10-11% to account for lower CE contribution and flat margins. Accordingly, we lower target price to S$0.65 (Prev S$ 0.72), still pegged to 10x FY15F PE. The stock remains inexpensive at 3.3x FY15F PE net of cash and 6% yield. Maintain BUY.
Olam Internationalannounced the sale of its dairy processing plant in Cote d'Ivoire to Royal FrieslandCampina for a cash consideration of US$18.7m. In addition, Olam will assign its trademark "Pearl" for a cash consideration of US$6.3m, providing Friesland the right to use the trademark for sweet condensed and evaporated milk products in certain designated countries in Africa. The disposal of the dairy plant is part of Olam's restructuring of its Dairy Products portfolio to focus on other upstream and midstream parts of its dairy business. Olam expects to book total cash inflow of US$25m and a one-time pre-tax gain of approximately US$10m upon completion of the transaction in Q2 FY2015.
Singapore Exchange (SGX) is consulting the public on a proposal to give retail investors improved access to bonds currently offered only to institutional and accredited investors. The proposed framework will improve access in two ways. First, retail investors can purchase SGX-listed wholesale bonds initially denominated in $200,000 or above in smaller lot size six months after their listing. Second, SGX proposes to allow issuers to make subsequent offers of new bonds on the same terms as the seasoned bonds to retail investors directly. Eligible issuers will be able to offer bonds more efficiently to retail investors through this framework.
STATS ChipPAC announced that Tianshui Huatian Technology has decided to terminate the discussion with regards to possible acquisition of STATS.
METech International has ventured into the electronic equipment repair business through a strategic partnership with R-Logic International. This venture serves to diversify the Group's business from precious metal recovery and ferrous and non-ferrous metal recycling to include repairs and reuse of electronic equipment. This initiative will strengthen the Group's 4R Strategy of Recycle, Recover, Reuse and Repair, and is in line with the Group's vision which is to conserve Earth's resources by extending the life of all electronics.
China's official Purchasing Managers' Index (PMI) which tracks sentiment in the manufacturing sector fell from a 27-month high in August, pointing to continued weakness in the economy, mainly in the property sector. The reading came in at 51.1 below consensus estimate of 51.2 and July's 51.7. A breakdown of the official figures shows that weakness in output, new order components and employment sectors were largely responsible for the drop. Meanwhile, HSBC's final PMI reading, geared towards smaller firms than the official one, also dropped, falling to a three-month low of 50.2, a dip from the flash reading of 50.3.
Source: DBS
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