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Kim Eng Maybank Reports August 2013

 
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PostPosted: Thu Aug 01, 2013 9:08 am    Post subject: Kim Eng Maybank Reports August 2013 Reply with quote

StarHub: Catching A Break From 4G & EPL; Upgrade to Hold TP $4.22
STH SP | Mkt Cap USD5.9b | ADTV USD8.4m

The share price has corrected significantly since our downgrade to SELL in May to near our DCF-based fair value of SGD4.22. We upgrade the stock from SELL to HOLD with TP maintained at SGD4.22. Our telco preference is M1 followed by StarHub and SingTel.
It is too early to confirm now but catalysts in 2H13 would include a potential increase in FY14 dividend now that cashflow uncertainties viz spectrum auction have cleared up, and we anticipate drumbeats for this to get louder toward end-FY13.
Recent reprieves the governments rejection of SingTels appeal for EPL not to be subjected to the cross-carriage rule, and lower-than-expected 4G spectrum auction cost may cause StarHub to be more receptive toward paying higher dividends, in our view.
Click here for full report gyap@maybank-ke.com.sg
The Hour Glass: Clockwork Ticking Down As Demand Slows
HG SP | Mkt Cap USD324.1m | ADTV USD0.1m

We recently met the management of The Hour Glass for an insight into the company and the watch industry.
Chinas efforts to weed out official corruption has resulted in a drop in Swiss watch export levels to Asia. Across the region, in fact, the luxury sector is facing increasing challenges.
In the short term, Hour Glass has to contend with weak consumer sentiment in Singapore. It recently cut its dividend payout, bringing its yield of 3.1% in line with peers. Valuation appears on the high side at 7.8x hist. P/E vs. its mean of 6.3x.
Click here for full report alisonfok@maybank-ke.com.sg
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PostPosted: Fri Aug 02, 2013 9:16 am    Post subject: Reply with quote

DBS Group: 2Q13 In Line, Danamon Off; Maintain Buy TP $20.00
DBS SP | Mkt Cap USD33.1b | ADTV USD64.5m

Maintain BUY on DBS with an unchanged Street-high TP of SGD20, pegged to a rolled forward 2014 P/BV 1.3x (1.4x previously) on factoring in higher market volatility risk.
DBS 2Q13 results were within our expectation and consensus. Our forecasts are maintained. That the Danamon deal is off is a setback for the group but it does clear a large overhang issue on the stock.
Near-term prospects remain robust and the group is well-positioned to ride steepening yields/rising interest rate trends.
Click here for full report desmond.chng@maybank-ib.com
Sembcorp Marine: Efficiency Is The Focus; Maintain Buy, TP $5.20
SMM SP | Mkt Cap USD7.5b | ADTV USD14.6m

2Q13 PATMI of SGD125m (-13% YoY, +5% QoQ) was lower than our preview figure of SGD162m, but can be explained by the lower revenue recognised which is entirely a timing issue (we forecasted SGD1.4b in revenue). More importantly, op. margin of 13.0% was within our expected range of 12-13%.
The key focus of the analyst brief was on SMMs efficiency enhancement plans. We came away more positive of its well thought-out plans and believe that these could alleviate the risks in Brazil and be an added support to sustain overall margins.
Orderbook momentum remains on track to meet our full-year forecast of SGD5.2b with YTD order win of SGD3.5b. Net orderbook breached another record high at SGD14.4b. Maintain Buy, SOTP-based TP unchanged at SGD5.20.
Click here for full report yeakcheekeong@maybank-ke.com.sg
UOB: 2Q13 Results Within Expectations; Maintain Sell TP $20.50
UOB SP | Mkt Cap USD27.0b | ADTV USD40.5m

Maintain contrarian SELL with an unchanged TP of SGD20.50, rolled forward to FY14 on a lower P/BV of 1.2x (1.3x previously) to factor in higher market volatility risk.
UOBs 1H13 net profit of SGD1.5b was within our expectations (53% of full-year) but above consensus (56%).
Results were fairly lackluster as bottomline growth was driven primarily by lower provisions and a one-off associate gain.
UOBs higher exposure to the domestic property sector remains our primary concern, and for which we believe a discount to peers is warranted at this stage.
Click here for full report desmond.chng@maybank-ib.com
Cosco: The Going Gets Tougher; Maintain Sell, TP $0.65
COS SP | Mkt Cap USD1.3b | ADTV USD1.3m

Cosco reported 2Q13 PATMI of SGD12.0m (-56% YoY, +24% QoQ), weaker than our below-consensus forecasts. 1H13 net profit makes up only 35% of our previous FY13F forecast. We cut FY13F-15F net profits by by 27-36%. Maintain Sell, with TP of SGD0.65, pegged to 1.1x P/B.
Operating margins continue to be under pressure, trending lower sequentially to 4.1% (1Q13:5.7%). We believe that yard underutilisation in the next few quarters would cap any meaningful margin upside.
We flag the rising debt level which has pushed net gearing higher to 0.86x (1Q13:0.82x) as Cosco took on more borrowings to fund its shipyard operations.
Click here for full report yeakcheekeong@maybank-ke.com.sg
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PostPosted: Wed Aug 07, 2013 9:09 am    Post subject: Reply with quote

City Developments: Set to Err on the Side of Caution; Sell TP $8.85
CIT SP | Mkt Cap USD7.7b | ADTV USD11.8m

Excluding one-off gains, CDLs 2Q13 core PATMI of SGD73.9m was below expectations, due to weaker hotel earnings and the timing of profit recognition from its residential projects.
Despite a creditable 1H13 in terms of residential sales, management is sounding greater caution for 2H13 on the back of the introduction of the Total Debt Servicing Ratio in June. CDL expects sales volume and mass market property prices to moderate as a result.
Given the expected headwinds and rich valuations compared with its more diversified peers, we maintain our SELL recommendation. TP unchanged at SGD8.85, pegged to a 30% discount to RNAV.
Click here for full report wilsonliew@maybank-ke.com.sg
Sembcorp Industries: Cautious On Power Competition; Hold, TP $5.48
SCI SP | Mkt Cap USD7.2b | ADTV USD11.4m

Results were below our expectations with 1H13 PATMI of SGD342m making up 42% of our previous FY13F forecast due to weaker Marine contribution (which we attributed to timing recognition). While Utilities performed well this quarter, Singapore operations would subsequently suffer from weaker electricity sales and lower power prices.
SCIs 400MW cogen plant expansion on Jurong Island could only see contribution from 2Q14 as opposed to 4Q13.
We cut FY13-15F net profits by 3-7% as we reduce Utilities estimates and revisions to SMM estimates. Our SOTP-based TP is cut to SGD5.48. Downgrade to Hold.
Click here for full report yeakcheekeong@maybank-ke.com.sg
StarHub: Moving To A More Stable Beat; Hold, TP $4.22
STH SP | Mkt Cap USD5.8b | ADTV USD8.5m

2Q13 results were slightly above expectations. Reported net profit up 16%/11% YoY/QoQ to SGD100.7m, against our expectations of SGD90-95m. Even after SGD10m in government-subsidised NGNBN adoption grants, net profits would have risen almost 20% to SGD90m.
StarHub has launched its English Premier League bundles that include a SGD300 rebate for the first year, which we believe will draw subscribers back to its network and reverse market share losses. The rebate however will be funded by cross-carriage fees and will not impact profits.
A weaker 2H is expected but higher FY14 dividends are still on the cards as net debt/EBITDA remained low at 0.5x, and we expect drumbeats for this to get louder as we near the end of the year. We maintain HOLD as it is trading close to our DCF-based TP of SGD4.22.
Click here for full report gyap@maybank-ke.com.sg
Genting Singapore: Another Quarter Of Bad Luck; Hold, TP $1.34
GENS SP | Mkt Cap USD12.9b | ADTV USD20.5m

GENS reported results that were below expectations on low VIP hold rate and anemic mass market GGR growth at Resorts World Sentosa.
We cut our FY13/FY14/FY15 estimates by 7%/19%/26% to reflect pedestrian GGR growth going forward.
Our new TP of MYR1.34 is based on a lower 10x FY14 EV/EBITDA vs 13.5x FY13 EV/EBITDA previously. GENS is positive on expanding into Japan but it is premature, in our view.
Click here for full report samuel.y@maybank-ib.com
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PostPosted: Mon Aug 12, 2013 9:49 am    Post subject: Reply with quote

Ezion Holdings: Keeping the Growth Alive; Buy TP $3.00
EZI SP | Mkt Cap USD1.8b | ADTV USD12.5m

- 2Q13 net profit of USD36.2m (+29% YoY, -21% QoQ) was within expectations with 1H13 net profit making up about 49% of our previous FY13F forecast. Maintain Buy, TP raised to SGD3.00 as we roll forward our valuations, pegged to 11x FY14F earnings.
- We believe there will be more business developments that could lead to further share price appreciation, such as the marine supply base business.
- Net gearing as at 2Q13 has reached 1.01x. Ezion would need more funding if it takes on more liftboat/service rig contracts this year. We see the likelihood of another 2-3 units this year.
Click here for full report yeakcheekeong@maybank-ke.com.sg
Wilmar International: Better Times To Come; Maintain Buy TP $4.60
WIL SP | Mkt Cap USD15.6b | ADTV USD19.3m
- 2Q13 results were within expectations, with recurring net profit up 43% yoy against a weak corresponding period last year. We see evidence that earnings are rebounding off a cyclical low.

- Management had a positive outlook for the rest of the year, which is in-line with our view that the Group overall should benefit from lower commodity prices, given that upstream plantations only accounted for 15% of PBT this quarter.

- We keep our forecasts mostly unchanged. Our TP of SGD4.60 remains pegged to 16x FY13F. Maintain BUY.

Click here for full report jameskoh@maybank-ke.com.sg

Neptune Orient Lines: Exceed Expectations, Weak Outlook Remains; Hold TP $1.28
NOL SP | Mkt Cap USD2.2b | ADTV USD2.8m
- Driven by the weak freight rate environment, NOL reported net loss of USD35m (1QFY13: -USD76m; 2QFY12: -USD118m) in the quarter.

- While key operating matrices were better than expected, headline numbers were boosted by gains on financing hedging instruments and PPE disposal. Outlook statement remains poor with management seeing few signs of a quick recovery.

- While the container shipping industry is probably near its cyclical trough, we remain cautious in our recommendation as supply overhang continue to cap rate levels. We value NOL using 1.1X FY13-14E BVPS (long-term average: 1.2X) to derive our TP of SGD1.28. Maintain Hold.

Click here for full report derrickheng@maybank-ke.com.sg

Yangzijiang: Bidding its Time; Hold TP $0.93
YZJSGD SP | Mkt Cap USD2.8b | ADTV USD5.9m
- Yangzijiang (YZJ) reported 2Q13 PATMI of CNY812m (-8% YoY, +13% QoQ). 1H13 PATMI made up 54% of our FY13F forecast. Maintain Hold, TP unchanged at SGD0.93.

- USD1.0b of new orders were secured in 1H13 and net orderbook now stands at USD3.24b. We forecast is for USD1.3b in new orders this year. There are 47 options worth about USD2.54b not yet exercised by its customers, and this could support part of its order intake.

- We do not see much downside given the low valuations (7.0x FY14F PER, 1.0x P/B). However, we also do not see any near-term re-rating catalysts given that outlook for Chinese shipbuilding sector remains depressed.

Click here for full report yeakcheekeong@maybank-ib.com
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PostPosted: Fri Aug 23, 2013 9:19 am    Post subject: Reply with quote

Ezion Holdings: Whats Waiting In The Wings; Maintain Buy, $2.37 - TP $3.00
EZI SP | Mkt Cap USD1.8b | ADTV USD11.6m

We believe that future developments in Ezions marine supply base business and it associate, YHM could step up to sustain the companys growth momentum after the liftboat business reaches a steady state. Maintain Buy, TP SGD3.00.

The marine supply base business could add SGD0.18/sh, to valuations while YHM could potentially add another SGD0.16/sh amounting to total potential accretion of SGD0.34/sh.

As we wait for more clarity on those developments, we believe that there would be scope for upward revisions to our growth estimates beyond FY14F. Meanwhile, the liftboat growth story still has legs.
Click here for full report yeakcheekeong@maybank-ke.com.sg
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PostPosted: Wed Aug 28, 2013 9:21 am    Post subject: Reply with quote

Singapore Daily
Sino Grandness: Ready, Willing And Able; Buy, $1.05 - TP $1.89
SFGI SP | Mkt Cap USD240.2m | ADTV USD1.4m

Reiterate BUY and SGD1.89 TP. In light of the recent short sellers attack on China Minzhong, Sino Grandness management has been very responsive and open in dealing with investors concerns and readily agreed to hold a conference call with our clients yesterday despite the extremely short notice given to them.
In all, the conference call was organised within 90 minutes and 20 clients participated. We think the information shared by management was helpful and informative, and should go a long way to calming investor concerns.
In our view, the share price drop in the past two days was purely due to fallout from the Minzhong short selling incident. Fundamentals are still firm and the biggest catalyst, the Garden Fresh IPO, still lies ahead. We believe Sino looks more attractive today compared to last week.
Click here for full report weibin@maybank-ke.com.sg
Wing Tai: Sturdy as a Tembusu Tree; Buy, $2.04 - TP $2.78
WINGT SP | Mkt Cap USD1.2b | ADTV USD1.2m

We reiterate our BUY recommendation on Wing Tai, with a slightly higher TP of SGD2.78, pegged to a 30% discount to RNAV. A bumper dividend of 12 cts/share has been proposed, translating to an attractive FYJun13 yield of 5.9%.
Its FYJun13 core PATMI of SGD294m was in line with expectations. Having achieved SGD885m worth of property sales in FY13, Wing Tai went on to launch The Tembusu in mid-August. 220 units have been booked, with an ASP of ~SGD1,500 psf.
The Group will remain selective in land acquisitions. Malaysia is deemed its most attractive market in the near-term for new investments, but the Group will continue to explore opportunities in Singapore, HK and China.
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