Towards Financial Freedom
DBS Equity Research: Wired Daily 16 Nov 2015
Stocks should start the session lower on the back of Friday's fall on Wall Street and in a knee-jerk reaction to the terrorist incident in Paris over the weekend. STI's rebound that was capped at 3044 and its subsequent decline from November 5th are in line with our technical expectations. But we had pegged a range from 2950-3050 earlier and now the lower band has given way. We now see immediate support at 2890 that should hold today. Immediate resistance is at 2950-75. In the event that the STI falls below 2890 subsequently, stronger support is seen at 2790.
The newly revamped Keppel Infrastructure Trust (KIT) has an asset size of close to S$4bn, with a portfolio well diversified across utility assets like gas, electricity, water and waste management. KIT is well positioned as the premier Singapore infrastructure-focused Business Trust. The Trust has very stable cash flows backed by largely availability based payments. Bigger scale and optimised balance sheet will create more inorganic growth opportunities. Current price offers 7.3% dividend yield; initiate with BUY and TP of S$0.56.
City Developments' net earnings for 3Q15 dropped 16% to S$106.4m, in line, due to lower contribution from the property development segment on lower project milestone completions. Close to 72% and 59% of pretax earnings came from recurring income segments. Operating margins were steady at c. 19%. Despite the soft sentiment in the residential market, we believe that most negative news have been priced in and we see attractive valuations at 0.8x P/Bk and 0.6x P/RNAV which is close to historical - 2 SD level. We maintain our BUY call and TP of S$10.26 (Prev S$0.57) pegged to 20% discount to our RNAV of S$12.82.
ThaiBev's3Q15 results were within expectations. While headline net profit surged by 115%, this was on the back of a disposal gain by its associate FNN. Excluding this, net profit would have grown c.12% largely on stronger associate's contribution. We maintain our BUY recommendation with a TP of S$0.82. We believe ThaiBev is taking steps to transform into a regional beverage player.
3Q15 recurring net profit for Ezion below expectation due to vessel downtime and repair cost. We trim FY15/16 net profit by 11/12%, to reflect adjustments in delivery schedule. We expect earnings to bottom out with the resumption of vessels currently under repair and upgrades, and new deliveries. Reiterate BUY; TP S$1.00.
2Q16 results for Yoma Strategic slightly below expectations. We expect sequential performance to pick up post election stability. Consumer, automotive and tourism sectors are key drivers in the immediate term. Maintain BUY, TP S$0.78.
China Everbright Water (CEWL) reported a 63% and 25% growth in turnover and net profit for 3QFY15 respectively, slightly below our expectation. We expect tariff hike for more projects while M&A strategy will continue. We have trimmed our earnings forecasts by 10-17% as our current estimations seem to be too aggressive. Despite this, we maintain our BUY rating with TP of S$0.79 because of its robust earnings growth of 20-29% for FY16 and FY17.
Noble Group reported 3Q15 core profit after perpetual dividends that fell 40% y-o-y to US$43.1m. The lower than expected result was mainly caused by continued losses at Noble's Mining & Metals segment. Given weaker than expected results, we cut our FY15-17F core profit by 14-22%. We maintain our HOLD call and revise our TP lower to S$0.49 (Prev S$0.57).
3Q15 results for Super Group below expectations largely due to disappointing sales in Southeast Asia and lower margins. Regional macro outlook remains challenging but new product launches should mitigate its full impact. We revised FY15-17F earnings by 19-21%. Maintain HOLD with lower S$0.85 TP (Prev S$1.05).
Gentingreported 50% fall in VIP rolling chip and unexpected spike in bad debts that contributed to 18% fall in adjusted EBITDA. Its investment portfolio continued to register losses. Management remains cautious on credit availability to clients, while bad debts are expected to remain elevated until at least 2H16. Maintain HOLD, TP lowered slightly to S$0.76 (Prev S$0.77).
3Q15 earnings of US$31.7m for First Resources were slightly ahead of our expectations. Gross margin jumped to 65% from 51% in 2Q15; as low refining utilisation rate would have done away with CPO purchases. FY15F/16F earnings tweaked by +3% each; TP raised to S$1.85. HOLD rating maintained.
Golden Agri Resources report 3Q15 earnings of US$16m, in line with our expectations, on annualised basis, but below consensus. Palm & Lauric EBITDA was higher than expected; although it was offset by weaker-than-expected contributions from Plantations and Oilseeds & Others. A new 300k MT p.a. biodiesel capacity is planned for commissioning in 1Q16 and start contribution in 2Q16. FY15F/16F earnings tweaked by +3%/-5%; TP adjusted to S$0.29 (Prev S$0.27).
Total retail sales in Singapore went up 4.6%, thanks mainly to car sales. Excluding the 48.3% surge in the latter, retail sales actually decreased 1.4% in September. Total retail sales value reached S$3.4 bn, up from S$3.2 bn a year ago. Month-on-month numbers also painted a troubling trend. Total sales fell 3.7% from August to September, and if motor sales were excluded, the drop would have been worse at 4.5%.
The newly revamped Keppel Infrastructure Trust (KIT) has an asset size of close to S$4bn, with a portfolio well diversified across utility assets like gas, electricity, water and waste management. KIT is well positioned as the premier Singapore infrastructure-focused Business Trust. The Trust has very stable cash flows backed by largely availability based payments. Bigger scale and optimised balance sheet will create more inorganic growth opportunities. Current price offers 7.3% dividend yield; initiate with BUY and TP of S$0.56.
City Developments' net earnings for 3Q15 dropped 16% to S$106.4m, in line, due to lower contribution from the property development segment on lower project milestone completions. Close to 72% and 59% of pretax earnings came from recurring income segments. Operating margins were steady at c. 19%. Despite the soft sentiment in the residential market, we believe that most negative news have been priced in and we see attractive valuations at 0.8x P/Bk and 0.6x P/RNAV which is close to historical - 2 SD level. We maintain our BUY call and TP of S$10.26 (Prev S$0.57) pegged to 20% discount to our RNAV of S$12.82.
ThaiBev's3Q15 results were within expectations. While headline net profit surged by 115%, this was on the back of a disposal gain by its associate FNN. Excluding this, net profit would have grown c.12% largely on stronger associate's contribution. We maintain our BUY recommendation with a TP of S$0.82. We believe ThaiBev is taking steps to transform into a regional beverage player.
3Q15 recurring net profit for Ezion below expectation due to vessel downtime and repair cost. We trim FY15/16 net profit by 11/12%, to reflect adjustments in delivery schedule. We expect earnings to bottom out with the resumption of vessels currently under repair and upgrades, and new deliveries. Reiterate BUY; TP S$1.00.
2Q16 results for Yoma Strategic slightly below expectations. We expect sequential performance to pick up post election stability. Consumer, automotive and tourism sectors are key drivers in the immediate term. Maintain BUY, TP S$0.78.
China Everbright Water (CEWL) reported a 63% and 25% growth in turnover and net profit for 3QFY15 respectively, slightly below our expectation. We expect tariff hike for more projects while M&A strategy will continue. We have trimmed our earnings forecasts by 10-17% as our current estimations seem to be too aggressive. Despite this, we maintain our BUY rating with TP of S$0.79 because of its robust earnings growth of 20-29% for FY16 and FY17.
Noble Group reported 3Q15 core profit after perpetual dividends that fell 40% y-o-y to US$43.1m. The lower than expected result was mainly caused by continued losses at Noble's Mining & Metals segment. Given weaker than expected results, we cut our FY15-17F core profit by 14-22%. We maintain our HOLD call and revise our TP lower to S$0.49 (Prev S$0.57).
3Q15 results for Super Group below expectations largely due to disappointing sales in Southeast Asia and lower margins. Regional macro outlook remains challenging but new product launches should mitigate its full impact. We revised FY15-17F earnings by 19-21%. Maintain HOLD with lower S$0.85 TP (Prev S$1.05).
Gentingreported 50% fall in VIP rolling chip and unexpected spike in bad debts that contributed to 18% fall in adjusted EBITDA. Its investment portfolio continued to register losses. Management remains cautious on credit availability to clients, while bad debts are expected to remain elevated until at least 2H16. Maintain HOLD, TP lowered slightly to S$0.76 (Prev S$0.77).
3Q15 earnings of US$31.7m for First Resources were slightly ahead of our expectations. Gross margin jumped to 65% from 51% in 2Q15; as low refining utilisation rate would have done away with CPO purchases. FY15F/16F earnings tweaked by +3% each; TP raised to S$1.85. HOLD rating maintained.
Golden Agri Resources report 3Q15 earnings of US$16m, in line with our expectations, on annualised basis, but below consensus. Palm & Lauric EBITDA was higher than expected; although it was offset by weaker-than-expected contributions from Plantations and Oilseeds & Others. A new 300k MT p.a. biodiesel capacity is planned for commissioning in 1Q16 and start contribution in 2Q16. FY15F/16F earnings tweaked by +3%/-5%; TP adjusted to S$0.29 (Prev S$0.27).
Total retail sales in Singapore went up 4.6%, thanks mainly to car sales. Excluding the 48.3% surge in the latter, retail sales actually decreased 1.4% in September. Total retail sales value reached S$3.4 bn, up from S$3.2 bn a year ago. Month-on-month numbers also painted a troubling trend. Total sales fell 3.7% from August to September, and if motor sales were excluded, the drop would have been worse at 4.5%.
Source: DBS
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