Towards Financial Freedom
DBS Equity Research: Wired Daily 13 May 2016
SIA Engineering - Downgrade to HOLD on valuation with TP of S$3.84
Vard Holdings - Upgrade to HOLD as diversification plans provides some solidity
4QFY16 profits of S$41m for SIA Engineering (SIE) flat y-o-y; in line. Final dividend of 8Scts declared, bringing full-year payout to 14Scts - slightly below expectations, as we were anticipating some special dividend payouts following SIAEC's sale of its 10% stake in HAESL for S$201m. Valuations are now looking pricey with SIE trading at 23x forward P/E versus peers' 18-19x. Fundamentals remain unchanged, with the heavy maintenance and engine JVs facing strong headwinds from lower work content and longer maintenance intervals. Downgrade to HOLD on valuation with TP of S$3.84.
Vard Holdingsregistered 1Q16 core loss of NOK31m; better than expected. Together with its 1Q results, Vard also announced a substantial US$300m (or around NOK2.4bn) contract win from Topaz Energy and Marine to construct 15 Module Carrier Vessels. We now estimate that Vard can achieve minor profitability by FY17, compared to our earlier estimates of losses, owing to the higher volume of new work secured. Our P/BV valuation peg is increased to 0.4x, reflecting the stronger outlook, raising our TP to S$0.19 (Prev S$0.13). Upgrade to HOLD as diversification plans provides some solidity.
1Q16 results for Ezion broadly in line; forex loss was offset by disposal gain. We trimmed FY16-17 earnings forecasts by 3-5% after adjusting the delivery schedule. We expect sequential improvement in 2H16. Reiterate BUY; TP S$0.85.
ComfortDelgro reported net profit growth of 8.6% y-o-y to S$73.4m, on the back of 3.3% growth in revenue to
S$996m, slightly below expectations due to forex translation. EBIT margins improved on lower oil price. We are projecting above-average growth of 10-11%. Maintain BUY, TP S$3.23.
1Q16 results for UOL Group in line; earnings visibility is a key plus in an uncertain operating climate. Residential portfolio is seeing steady sales while Commercial portfolio is expected to provide stable returns. UOL is the cheapest large cap developer in town. Trading at an attractive 0.5x P/NAV, which is close to its - 2 SD historical average, we believe that negatives from a weakening operating outlook has been priced in. Maintain BUY, S$7.39 TP is pegged to a 30% discount to our RNAV of S$10.36.
1Q16 net profit for Delfi Ltd (formerly known as Petra Foods) slightly ahead on better gross margins and lower admin expenses. Top line indicates no signs of worsening from 4Q though sentiment is still cautious. Maintain HOLD, new TP at S$2.56 (Prev S$2.21) is based on FY17F earnings.
Pacific Radiance reported 1Q16 net loss in line with expectations. OSV segment utilisation recovered slightly to over 40% in 1Q16, but day rates weakened. Subsea segment could pick up slightly in 2Q/3Q16. We are still forecasting losses in FY16/17. Maintain FULLY VALUED, TP: S$0.26.
ASL Marine has secured a total S$156m worth of contracts from its shipbuilding, shiprepair & conversion, ship chartering and dredging engineering divisions. The contracts secured are mainly from repeat customers in the region as well as in Middle East, USA and Europe. The shipbuilding and ship repair & conversion contracts are expected to be delivered over the next 1-2 years' period and the ship chartering contracts will have a tenure of 2 to 5 years.
Roxy Pacific has finalised its plans to create an upscale Nokubranded resort in the Maldives. The acquisition of Zitahli Kuda-Funafaru cost Roxy Pacific US$31m. This will be Roxy Pacific's second property under its premium brand, Noku, and its first purchase in the Maldives. The first Noku property opened in Kyoto, Japan, in November last year.
Kitchen Culture has secured a contract amounting to approximately RMB5.55m for the supply, delivery and installation of Liebherr wine refrigerators for Chengdu Courtesy Hotel Management Co's. apartment project in Chengdu Sichuan, China. The contract is expected to be fulfilled by the Group by mid 2017.
Source: DBS
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