Towards Financial Freedom
DBS Equity Research: Wired Daily 6 May 2015
Noble Group - Headwinds to re-rating persist. Maintain HOLD, TP lowered to S$0.95
Tiger Airways - Due to turn around in FY16. Maintain BUY with higher TP of S$0.42
1Q15 results for Noble Group in line. Weak 1Q15 core profit was expected due to abnormally high margins in 1Q14. While we expect a seasonal uplift in profitability (1Q is usually the weakest quarter), low ROE and uncertainty over upfront profits booked for offtakes is expected to cap share price performance. Maintain HOLD, TP lowered to S$0.95 (Prev S$ 1.12).
Losses for Tiger Airways Holdings narrow in 4Q15 but still slightly below expectations. Yield recovery is encouraging while jet fuel costs remain low and below our US$90 assumption. We expect Tigerair to post its first full-year profit in five years come FY16. Maintain BUY. With a revitalised balanced sheet, and a recovery in earnings and cash flow, our TP is lifted to S$0.42 (Prev S$ 0.39) (due to higher cash earnings estimates), based on 8x FY15/16 EV/EBITDA. We continue to like the stock as a recovery play.
1Q15 earnings for OSIM International were below expectations, dragged by weak consumer sentiment across all markets. Dividend of 1 Sct was declared. We cut FY15F/FY16F earnings by 10%/14%. We cut our store count assumption on less aggressive expansion, and have also imputed higher staff costs and other operating expenses. Maintain HOLD with lower TP of S$1.82 (Prev S$ 1.94).
PACC Offshore Services Holdings reported weak results in 1Q15. Results disappoint again as margins continue to falter amidst weak oil price environment. First SSAV is expected to drive earnings for the rest of FY15; but contract for second SSAV is not secured yet. Cut FY15/16 earnings by 28%/13% on lower day rate/utilisation assumptions. Maintain HOLD with TP of S$0.50.
PECis expected to record a net loss for 3Q15. The weaker than expected financial performance was mainly attributable to higher costs and difficulties in the recovery of variation claims from existing and completed projects.
CapitaLand has changed the names of its three trusts with effect from Wednesday. CapitaCommercial Trust has been renamed CapitaLand Commercial Trust while CapitaMall Trust has been changed to CapitaLand Mall Trust. CapitaRetail China Trust has been changed to CapitaLand Retail China Trust.
Q & M Dental Group is exploring a possible spin-off of its subsidiaries, Q & M Dental Holdings (China) (QDHC) and Q & M Dental Group (Malaysia), (QDGM) via a listing on a reputable Stock Exchange. QDHC is in the business of operating dental hospitals and clinics in the People's Republic of China while QDGM is in the business of operating dental clinics and a dental supplies and equipment distribution company in Malaysia.
MDR Limited is setting up a large-format digital inkjet printing business in Myanmar via its wholly owned subsidiary Pixio, a Malaysian outdoor advertising firm.
US stocks fell on growth concerns and as speculation rose that Greece won't be able to resolve its debt crisis. Technology stocks led losses. Concern has grown over whether Greece can meet its obligation to pay about USD1.1bil due to the International Monetary Fund by May 12. U.S. trade deficit widened in March to the highest level in more than six years, fueled by a record surge in imports as commercial activity resumed at West Coast ports following a resolution to labor disputes. The jump probably means the U.S. economy contracted in the first quarter when the Commerce Department issues revisions later this month, this according to Bloomberg. Meanwhile, a separate report showed service industries such as real-estate firms and restaurants unexpectedly grew at a faster pace in April. Oil price rose to an YTD high with Brent at USD67.7pbl on hopes that the supply glut is easing. Brent is heading closer to our technical upside objective of USD70-72pbl.
Source: DBS
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