Towards Financial Freedom
DBS Equity Research: Wired Daily 5 May 2015
Japfa - Downgrade to HOLD; no near-term catalysts
Venture - Downgrade to HOLD on limited upside to unchanged TP of S$8.40
1Q15 core earnings for Japfa Ltd fell 77% y-o-y, below estimates. Day-old-chick (DOC) oversupply, weak purchasing power, and weaker Rupiah (i.e. FX losses) weighed down performance. FY15F/16F earnings cut by 38%/27% and TP lowered to S$0.54. Downgrade to HOLD. The group expects DOC and broiler markets to remain challenging in the near term.
Venture Corporation's1Q15 net profit of S$32.6m (+6% yo-y) in line with our expectations. Higher R&D costs and tax rate drive down net margin. Medical & Life Science is likely to be the key growth driver in the medium term with increasing interest in newer and lower cost technologies in healthcare. However, Printing and Imaging as well as Computer Peripherals segments are likely to decline with the economic uncertainties which could slow down overall growth. At its current price, the share has limited upside to our unchanged TP of S$8.40, but offers a 6% yield. Downgrade to HOLD.
Frasers Hospitality Trustreported 2Q15 DPU of 1.38 Scts, 4% ahead of IPO forecast. We expect softer near term outlook for Singapore and Malaysia. Australia, Japan and UK should benefit from growth in international visitors and firmer corporate demand. Maintain BUY, TP raised slightly to S$0.95 (Prev S$ 0.94).
Tiger Airwaysreported a net loss of S$18.8m or 0.75 Singapore cent per share for its fourth quarter FY2015, an improvement from the S$95.5m loss or loss per share of 8.59 cents a year ago. For the full year at the end of March 2015, net loss was S$264.2m, worse than the previous year's S$223m. This is the third consecutive financial year that the group has recorded pre-tax losses.
Kencana Agriexpects to report a consolidated net loss for 1Q2015 mainly due to foreign exchange losses resulting from the depreciation of the IDR against the USD and lower average selling prices of CPO.
Sing Holdings expects to report a loss for 1Q2015. The loss is primarily due to higher sales and marketing expenses incurred for the Group's development properties, without corresponding revenue recognition from sales of units in Waterwoods in accordance with accounting standards.
Biofuels company Lereno Bio-Chem plans to expand into the education business with a S$20.4m investment in a private education company. Lereno said that it will use cash and shares to buy a 51% stake in HTwo Education Holdings from two existing shareholders who currently hold a combined 71% stake in the education business. The cash component of the consideration will be funded through a rights issue and private placements. HTwo runs a range of education businesses, including infant and childcare services, student care, tuition and enrichment businesses.
Singapore's April PMI fell to a more than two year low of 49.4, indicating a fifth consecutive month of contraction. Declines in new orders - both locally and from abroad - were key reasons for the decline. Production output sank back into contraction while inventory, stocks of finished goods and employment continued to fall.
US stocks ended higher after data showed factory orders rose the most since July, rising optimism a winter slowdown in the economy may be short lived. Meanwhile, the benchmark STI continues its near-term consolidation. The McClellan Oscillator, a measure of short-term market breadth, has fallen from an overbought level of +37 in mid-April to -10. Levels around -30 are considered oversold for the McClellan. We maintain our view that in the short-term, any further decline towards 3460 or 3430 presents bargain hunting opportunities. Near-term resistance level is around 3490.
Source: DBS
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
