Towards Financial Freedom
DBS Equity Research: Wired Daily 11 Nov 2014
Super Group results below expectations - Maintain Hold
3Q FY14 earnings of S$10m for Super Group were below our expectations on lower sales from factory relocation, lower margins and higher effective tax rates. We see Super undergoing a period of transition. It is currently innovating new products, while strengthening its existing business across its key markets. Substantial initiatives are ongoing and results will take time to yield. We lower revenue and earnings, but maintain growth rate at 8%. However, we hold a more positive gross margin outlook for FY15F and FY16F, on weakening and softer commodity prices for Sugar, Palm Oil, and Coffee. On a slower growth outlook, we now derive our new TP of S$1.15 based on 20x FY15F earnings. Maintain HOLD since prospects are weak and upside is limited.
ARA Asset Managementreported 4Q14 PATMI of S$30.7m, 54% higher y-o-y on the back of a 60% y-o-y rise in revenues to S$52.8m. With the formation of Straits Real Estate (SRE), ARA has a formidable partner with significant capital (up to S$1bn) which can be deployed as seed capital for future funds. ARA's flagship ARA Dragon Fund 3 (ADF3) should kick-start in 1Q15, after the deployment of ADF2 is completed. ADF1, which is in the final stages of divestment, is expected to wind down in 2015, where ARA is entitled to a performance fee, which could be a significant kicker for the stock price. We have a target price of S$1.98 based on (i) 20x P/E on its recurring fee income and (ii) market price of its REITs.
Nam Cheongreported 3QFY14 net profit of RM126m (+113% y-o-y and +100% q-o-q). This is Nam Cheong's strongest quarter to date since listing in 2011. Revenue was up 81% y-oy to RM619m as 16 vessel sales contracts were secured during the quarter. YTD in 2014, Nam Cheong has secured sale contracts for 25 vessels worth US$505m, another record year, beating last year's numbers already. More details to follow pending analyst briefing. We currently have a BUY rating on the stock with TP of S$0.48.
Mainland Chinese authorities and related parties announced yesterday that the Shanghai-HK stock connect that was delayed earlier will now be launch next Monday, 17 November. Our HK research says this is good news for HKEX (388.HK), Chinese brokers and Shanghai-HK dual listed H-shares that trade at deep discounts. On the other hand, H-shares with sizeable premiums may see some pressure.
Source: DBS
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