Towards Financial Freedom
DBS Equity Research: Wired Daily 18 May 2016
- STI - 2700-2836 view unchanged, 2685 crucial support
- Asean Telecom Sector - Spotting winners & losers
- StarHub - Limited downside risk
- Singapore Airlines - Portfolio strategy paying off
- ST Engineering - Orderbook remains robust
- Thai Beverage - Runaway performance on Beer's showing
- Bumitama Agri - Organic and inorganic growths
- First Resources - Lower yields, lower prices, low-margin downstream
- Nam Cheong Ltd - Dry spell vaporises revenue visibility
- Mermaid Maritime - Earnings under pressure
- Eu Yan Sang - Consortium launches privatisation bid
- Vallianz - Contract wins worth up to US$210m
- Darco Water - secured S$11.5m wastewater treatment projects in Chin and Malaysia
- Charisma Energy Services - acquired power plant in China
- March Singapore retail sales +5.1 y-o-y
Market
STI - 2700-2836 view unchanged, 2685 crucial support Our view remains for for the STI to trade within 2700 (2685 at worst) to 2835 in the weeks ahead. Oversold near-term technicals and lower valuation should underpin the market but rebound upside is cap by an uncertain macro outlook, weak 1Q results season, USDSGD rebound and the 23 June BREXIT referendum. The 2685 level is crucial. If the current correction continues beyond this level, the downtrend should extend further to 2600 before finding support.
Industry Focus
Asean Telecom Sector
Spotting winners & losers
• Nature and tenure of competition is different in Malaysia and Thailand; we prefer Thailand
• In Singapore, most negatives are priced in but wait till 9M16; top-line growth in Indonesia may disappoint over the next 2-3 years
• Top picks are JASIF and ADVANC, top SELLs are Maxis and Digi. M1 & StarHub are dark horses
Stocks to Watch
StarHub (STH SP): HOLD (Upgrade from Fully Valued) Limited downside risk
• Net profit of S$92.8m (+26% y-o-y, +15% q-o-q) was in line
• Broadband and enterprise fixed line likely to offset weakness in mobile and pay TV
• Upgrade to HOLD with 6% yield due to limited downside
Singapore Airlines (SIA SP): BUY
Last Traded Price: S$11.63; Price Target: S$12.50 (Upside 7.5%) (Prev S$13.30)
Portfolio strategy paying off
• FY16 headline profit of S$804m rose 119% y-o-y
• Core profit below our forecast due to soft yields at SIA main line and wider losses at SIA Cargo
• Lower fuel costs and growth at other subsidiaries to drive earnings growth
• Maintain BUY, TP S$12.50
ST Engineering (STE SP): BUY
Orderbook remains robust
• 1Q16 core profits in line; headline PBT affected by oneoff items
• Revenues boosted by Aerospace initiatives
• Orderbook of S$11.5bn remains healthy
Thai Beverage (THBEV SP): BUY
Runaway performance on Beer's showing
• Reiterate BUY with raised TP of S$0.92
• 1Q16 results exceeded expectations on strong beer performance, following 4Q15's momentum
• Raise FY16F/17F earnings by 10% each
• Re-rating to continue as it transforms into a regional player with strong fundamentals
Bumitama Agri (BAL SP): BUY
Last Traded Price: S$0.79; Price Target: S$0.96 (Upside 22.6%) (Prev S$0.96)
Organic and inorganic growths
• 1Q16 earnings came in slightly below on lower-than expected CPO ASP
• New acquisition of 2,982 ha of planted estates boosted new planting to 3,161 ha
• Forecasts and TP unchanged. Maintain BUY for 22% upside
First Resources (FR SP): HOLD
Last Traded Price: S$1.72; Price Target: S$1.85 (Upside 7.7%) (Prev S$1.85)
Lower yields, lower prices, low-margin downstream
• 1Q16 earnings below our/consensus expectations
• Drop in yields and weaker ASP were the main culprits; given one-month lag time between pricing and delivery
• Output growth indicated to skew towards lower end of 0% to -5%. Forecasts, TP unchanged for now
Nam Cheong Ltd (NCL SP): FULLY VALUED
Last Traded Price: S$0.078; Price Target: S$0.07 (Downside 16.5%) (Prev S$0.07)
Dry spell vaporises revenue visibility
• Net loss of RM40.1m in 1Q16
• Marked slowdown in construction work; steep fall-off in shipbuilding revenues expected in FY16
• Charter segment utilisation at c.20%
Mermaid Maritime (MMT SP) : FULLY VALUED
Earnings under pressure
• 1Q16 net profit of US$1.3m was in line
• Revenues sink on low subsea vessel utilisation
• Income from drilling rig associate AOD likely to fall in
• 2016/17 as contracts are renegotiated
News
Eu Yan Sang - Consortium launches privatisation bid
A consortium led by private-equity fund Tower Capital, Temasek Holdings unit Blanca Investments and Eu Yan Sang International's group chief executive officer Richard Eu has launched a bid to take Eu Yan Sang private. The consortium is offering S$0.60 for each share it does not already own. The offer price values Eu Yan Sang, which sells traditional Chinese medicine, at about S$269m.
Vallianz - Contract wins worth up to US$210m
Vallianz Holdings has set a new record of US$1.2 bn for its order book following contract wins worth up to US$210m in total. The Group secured new long term charter contracts for the supply of 13 Offshore Support Vessels (OSVs) to a national oil company in the Middle East (NOC). The OSVs will be chartered to the NOC for up to 7 years. The Group expects the OSVs to be deployed progressively at the NOC's oil fields from the second half of 2016 in accordance to the NOC's project schedule. These latest contract wins will boost the Group's chartering services order book to US$1.2 bn, which comprises mainly long term charters that stretch up to 2025.
Darco Water - secured S$11.5m wastewater treatment projects in Chin and Malaysia
Darco Water Technologies has been awarded contracts in total worth of approximately S$11.5m in China and Malaysia, bringing the total value of new contracts recently won to approximately S$33m. It has won RMB41.6m pharmaceutical wastewater treatment project in China and secured MYR8.2m worth of pharmaceutical and solar cell wastewater treatment projects in Malaysia.
Charisma Energy Services - acquired power plant in China
Charisma Energy Services has acquired an 80% stake in a 20 megawatt (MV) solar Photovoltaic (PV) power plant for RMB7m, and to supply electricity to the national grid in central China for 25 years. The expected commercial operation date of the project is in 1st quarter of 2017 and the expected revenue from the project for the first five years is approximately RMB140m.
March Singapore retail sales +5.1 y-o-y
Car sales continued to inflate the overall retail sales numbers, even as headline figures continued to soften. On a year-onyear basis, March headline retail sales jumped 5.1%. This was boosted by a 41.3% increase in car sales, which account for 10.8% of the total weightage in the headline figure. When compared to February, headline figure for sales in March had softened by 1.4%; motor sales fell by 4.8%. Excluding motor sales, sales recorded a 2.2% y-o-y fall. This comes after a 9.5 % y-o-y fall in February. Similarly, March recorded a 0.6% fall from February's numbers, which extends softening sales into the fourth straight month.
Source: DBS
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
More articles on Towards Financial Freedom
Duty Free International Ltd. - A duty-free giant in the making
Created by kiasutrader | Oct 17, 2016
Cityneon Holdings - 'Avengers' showcasing in the Land Down Under
Created by kiasutrader | Jun 07, 2016
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
New Update. Discover investment communities that resonate with your ideas
Trade Confidently & Analyze Charts Conveniently - Download VCPlus IOS & Android App Now!
Latest Videos
Apps
Top Articles
1
SGX Market Updates
US Magnificent Seven Stock DLCs Introduced for Asian Market Hours
2
RHB Investment Research Reports
3
SGX Market Updates
4
5
CEO Morning Brief
Keppel DC REIT Buys Data Centres in Singapore’s Genting Lane for S$1b
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
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....
