Towards Financial Freedom
DBS Equity Research: Wired Daily 14 Nov 2014
First Resources - Hit by lower refining margins. Downgrade to HOLD with lower S$2.09 TP
SATS - Weak earnings outlook. Downgrade to FULLY VALUED with lower S$2.70 TP
Pacific Radiance - Subsea division drags down 3Q14 performance. Maintain BUY with slightly lower TP of S$1.30
First Resources' core 3Q14 earnings of US$45m were below. The Group booked lower-than-expected yield/CPO ASP, thinner refining margins and higher tax rate. FY14F/15F/16F earnings were revised by -14%/-3%/+1%. We expect slightly lower 4Q14 output. Target price lowered to S$2.09 (Prev S$ 2.14); rating downgraded to HOLD for 6.5% potential return.
SATS reported 2Q15 earnings below expectations on weaker TFK & associates contribution, and margin compression. We expect weak earnings ahead; cut FY15F/FY16F earnings by 7-8%. Downgrade to FULLY VALUED with lower S$2.70 (Prev S$ 2.90) TP.
3Q14 earnings for Pacific Radiance were impacted by losses from subsea vessel division; results below estimates. We expect margins to normalise in FY15 once subsea vessel utilisation is back on track. Vessel additions in FY14/15 to drive growth; no significant impact from oil price weakness expected. Maintain BUY with slightly lower TP of S$1.30 (Prev S$ 1.34).
3Q14 results for ComfortDelgro in line, net profit grew 5.3% to S$80.8m. Steady performance expected as we enter 4Q; 9M14 forms 78% of our full-year forecast (9M13: 77%). The stock is trading at 19.1x FY15F PE, which is c.1.5 standard deviations above historical average. Maintain HOLD, target price kept at S$2.71.
Frasers Centrepoint Ltd registered a strong end to FY14, and declared a final DPS of 6.2 Scts. FY14F revenues and pretax profit rose by 33% and 21% y-o-y to S$2.7bn and S$0.7bn, respectively. Attributable profit (after fair value adjustments) fell 31% y-o-y to S$501m, mainly due to oneoff expenses from restructuring costs of S$42m (debt repayment prior to listing) and acquisition costs attributable to Australand. Upward earnings trajectory from unrecognized revenues of S$3.9bn; recurring revenues from Australand. Maintain BUY, TP S$2.05 (Prev S$ 2.08).
Yanlord Land Group reported muted 9M14 results with sales delivery skewed to 4Q. We expect significant sales improvement in Nov/Dec, given more new launches. FY14 contracted sales is also expected to reach c.Rmb11-13bn (i.e. 13-27% lower y-o-y). Maintain HOLD with revised TP of S$1.10 (Prev S$ 1.13).
Naspers Limited, Schibsted Media Group, Telenor Group and Singapore Press Holdings announced an agreement to establish joint ventures for the development of their online classifieds platforms in four key markets - Brazil, Indonesia, Thailand and Bangladesh. The transaction will bring substantial benefits to consumers. Combining the platforms will make it faster and easier than ever for people to trade and turn their items into cash. They will be able to choose from a wider selection of items and be more successful in selling their own items to a larger audience of buyers. By coming together, the businesses will also be able to share cost, expertise and people.
China's economy lost further momentum in October, with factory growth dipping and investment growth hitting a near 13-year low. Fixed-asset investment, an important driver of growth, grew 15.9% in the first 10 months of the year from a year ago. That was the weakest pace since December 2001. October factory output rose 7.7%, which was higher than August's 6.9% but below September's 8%. It was the second weakest pace since the height of the global financial crisis.
US indices rose modestly as better-than-estimated results from Wal-Mart Stores Inc. and corporate deals overshadowed losses in small caps and energy shares. The S&P500 trades at 17x forward earnings, its highest valuation since December 2009, this according to Bloomberg. Oil price fell as hopes for a production cut at the Nov 27 OPEC meeting faded. Meanwhile, Crude supplies at Cushing, Oklahoma, the delivery point for WTI, expanded to the highest level since May, a U.S. government report showed. WTI for December delivery fell to USD74.3pbl while Brent ended near USD78pbl.
Source: DBS
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