Towards Financial Freedom
DBS Equity Research: Wired Daily 25 June 2015
China Merchant Holdings - Acquisition of 3 toll roads EPS accretive, Maintain Buy with TP raised $1.54
Noble Group - Aggressive share buyback stabilizes stock price, upside to $0.785, support $0.71
China Merchants Holdingsis buying three roads in Guangxi Zhuang Autonomous Region totalling 160km for RMB3.04bn. This will lengthen the Group's road portfolio by 39% to 575km and the average remaining concession period by c.24% to 16.9 years. These acquisitions should be EPS accretive from 2017F onwards, and could pave the way for CMHP to seek a dual-listing in HK in the future. Maintain BUY with raised TP of S$1.54.
While First Resources has exhausted its forward sales in 2014; we continue to conservatively expect FR to maintain its ASP relatively in line with spot average this year. We note that the net impact from the B15 export levy is negative as a c.US$50/MT drop in net CPO ASP is more than c.US$20/MT margin from processing (i.e. refinery + biodiesel). Meanwhile, we expect FR's output growth to decelerate from CY19F as new planting is forecast to moderate from this year onwards. Maintain Hold with $2.11 TP. At current price, the stock has priced in 17% earnings CAGR between CY15F (low base) and CY18F.
Noble Group announces President of China's state-owned food-processing company Cofco Corporation as a nonexecutive director. At the same time it continues to buy back shares, the latest being 14mil shares at $0.6945/share. In total this month, Noble has bought a total of 119.7mil shares (1.776% of issued shares) at $0.694/share. Technically, we see near-term support at $0.705-0.71. There is upside bias to $0.785 should the $0.74 level be taken out. Beyond that, the next level is $0.85.
SATS' Japan-based catering company TFK Corporation has landed a multi-year inflight catering contract from Delta Air Lines worth about S$325.2mil. SATS holds a near 60 per cent stake in TFK.
U.S. stocks fell as Greek debt talks dragged on. Greek PM is preparing for continued negotiations with creditors after a meeting of euro-area finance ministers failed to see a breakthrough on the terms of aid. Meanwhile, Fed Governor Jerome Powell said Tuesday the chances are about 50-50 that the U.S. economy will improve enough for the central bank to raise interest rates in September.
Source: DBS
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