Towards Financial Freedom
DBS Equity Research: Wired Daily 4 Aug 2015
Cosco Corp - Upgrade to HOLD; operational challenges reflected in the price. Target price lowered to S$0.42
We upgrade Cosco Corp to HOLD, as operational challenges are reflected in the price. After losing c.40% in 3 months, Cosco is now among the cheapest shipyards in the region, trading at 0.6x P/BV. We believe sector headwinds and operational challenges have been largely reflected in the price. Looking ahead, the shipping segment could return to profits in 3Q15 taking cue from the surge in BDI from 600 points to 1100 points since June. Most importantly, we believe Cosco will pull through this downturn with the strong backing of its parent. We have cut our net profit forecast for FY15 to breakeven level and FY16 to S$10m profit after lowering margins for shipbuilding and offshore segments each by 1.5ppts. We have also lowered our target price to S$0.42 (Prev: S$0.49), pegged to a lower FY15 P/BV multiple of 0.7x (Prev: 0.8x) in the light of deteriorating earnings.
iFAST Corporation has received approval from the Securities and Futures Commission of Hong Kong (SFC) to carry on Type 9 regulated activities (Asset Management), subject to additional licence conditions proposed by SFC. The approval will allow iFAST HK to provide Discretionary Portfolio Management Services (DPMS) in Hong Kong. iFAST HK is now planning to launch online DPMS through Fundsupermart Hong Kong this week.
SBI Offshoresaid that it will acquire from its German partner, the Gräss Group, 51% stakes in four revenue generating solar photovoltaic (PV) power plants and systems in Europe and two operating companies for S$13.97m in a cash and shares transaction. SBI Offshore will pay the Gräss Group S$2.3m in cash and issue 44m new shares at S$0.265 each which is worth S$11.7m. The Group expects to recognise revenue and profit from the proposed acquisition from 2H FY15, with full-year contribution starting from FY2016.
Ho Bee Land has inked a second prime office acquisition in West End London within a week, with the acquisition of the office known as 110 Park Street, Mayfair, for £45.8m. The property is acquired for recurrent income and will be held as a long term investment.
Keong Hong Holdings has been awarded a contract amounting to S$107.5m by Raffles Hospital Properties. The Project is to construct a 20-storey medical building with 2 basements at Victoria Street / North Bridge Road. The construction of the Project is to be carried out in two phases and is expected to be fully completed by August 2017.
Transport fares will be reduced by up to 1.9% this December, said Transport Minister Lui Tuck Yew. The new fares will take effect with the opening of Downtown Line 2 so that the fare system will have to be tweaked only once. He also disclosed that the Public Transport Council (PTC) will work out the allocation specifics, and that he expected that all commuter groups will be paying less thereafter. He cited falling fuel prices as the primary factor for the fare reduction. The latest Purchasing Managers' Index (PMI) slipped 0.7 point to 49.7, reverted to contraction mode in July after rising for two straight months. The market projected a reading of 50.1, down from June's 50.4. The contraction in the overall PMI was attributed to first-time contraction in new orders (down 0.9 points to 49.9) and production output (down 1.1 points to 49.8) as well as further decline in new export orders (down 0.5 points to 49.4). The electronics PMI also fell below the 50-point mark in July, dropping 0.8 points to 49.5.
US stocks fell, dragged lower by commodity stocks as Brent slipped below the USD50pbl mark on concerns about Iran supply and China slowdown. Meanwhile, bond yields fell as inflation expectations tamed on signs that global growth has slowed further. The US 10-year bond yield has fallen from 2.45% to 2.15% since mid-July. Attention turns to July nonfarm payrolls this Friday. Consensus expects a reading of 225k.
Source: DBS
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