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Pacific Andes
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Pinnacle
Master |
15-Nov-2007 14:50
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OCBC - CFG will continue to drive growth Another strong quarter from CFG. Pacific Andes Holdings (PAH) posted yet another set of good quarterly results, buoyed by higher contribution from China Fishery Group (CFG). 3Q07 net earnings rose 46% YoY to HK$85.2m. CFG continued to be the main driver as it posted a 72% YoY surge in 3Q07 net earnings to US$19.6m. Trawling accounted for 66% of CFG's revenue with the balance from fishmeal processing. China accounted for 49% of 9-mth revenue with sales of premium fish products to Japan and Korea making up 33%. CFG also benefited from higher fish price prices, which moved up by an estimated 10% YoY in 1H07, although PAH's overall performance was dragged down by higher interest expenses (up 218%) due to the issuance of convertible bonds. CFG will continue to drive growth. PAH completed the increase of its stake in CFG in Jul 2007, which currently has 23 super trawlers and about 6% of the total fishmeal processing capacity in Peru. CFG will continue to drive PAH's growth as CFG is now riding the benefits of its enlarged operations in North Pacific and Peru. PAH's trading of frozen fish unit has already reached almost steady state and we do not expect any sharp improvement from this business. With the enlarged operation, we expect CFG to see a doubling in profits to US$94m in FY07 versus US$49.0m in FY06. With plans to re-deploy three of its super trawlers to the South Pacific for the fishing of Jack Mackerel, this is another exercise to better use its assets and increase profits. Together with the increasing exports of high-margin fish roe to Japan (as seen from rising contribution to Japan), this should also help to sustain its gross margin at more than 35%. Still a BUY. With several recent acquisitions in Peru, we expect CFG to be raking in the benefits from this year, with a projected doubling in profits. While the market has been volatile these past few weeks, we believe that consumer demand in China, especially for fish products, will remain strong. We have revised our FY07 numbers from HK$586m to HK$532m, mainly to account for higher expenses. We are also lowering our fair value estimate from 96.5 cents to 87 cents mainly due to the 6% appreciation of the S$ against the HK$. As the upside potential is around 20%, we maintain our BUY rating. |
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Pinnacle
Master |
15-Nov-2007 14:47
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CIMB - Pacific Andes (S$0.725) -2QFY08 results- Strong contributions from China Fishery Within expectations. 2Q08 net profit of HK$85.1m (+46.2% yoy) is in line with our expectations, with 1H08 net profit of HK$182.0m (+41.5% yoy) representing 34.6% of our FY08 estimate and 32.8% of consensus?s. The relatively low percentage was a result of the company raising its stake in China Fishery to 63.9% from 28.8% only in end-July, resulting in higher minority interests. The stellar profit growth was underpinned by strength in both supply chain management and China Fishery. SCM segment remained robust. The supply chain management (SCM) business was robust with 1H08 sales (+25.8% yoy to HK$2,118.6m) representing 54.5% of our FY08 estimate. The company continues to tap rising demand for fish in China, with China remaining its most important market, accounting for 69.6% of 1H08 revenue. Strong contributions from China Fishery. China Fishery (December year-end) reported impressive sales of US$95.5m (+142.9% yoy), boosted by two new vessel operating agreements (VOA) secured in Jan 07 and contributions from fishmeal operations, acquired in late 2006. Net profit rose a sterling 72.0% yoy to US$19.6m, in line with our expectations despite seasonal weakness for fishmeal sales. Sales contributions from fishmeal increased to 34.4% (US$32.8m) in 3Q07 from 28.8% (US$31.8m) in the previous quarter. Maintain Outperform; target price unchanged at S$1.10. We are keeping our EPS estimates pending further discussions with management. Meanwhile, we maintain Outperform and our target price of S$1.10, still based on CY09 sum-of-the-parts valuation. |
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Pinnacle
Master |
15-Nov-2007 13:53
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DBS Vickers - Factoring lower margins from China Fishery Buy; S$0.725; Price Target : 12-Month S$ 0.99 (Prev S$ 1.04) Story: PAHs 2Q and 1H results were strong, but it was below the high expectations we had for the Group. Point: 2Q revenue grew 111% to HK$1.59bn, from HK$751.9m, largely from higher contributions from its subsidiary, China Fishery Group (CFG) as a result of its increased stake (from 28.8% to 63.9%). Net profit grew 46% to HK$85.1m, a lower increase than topline due to higher operating expenses (bunker and wages) from CFGs operations and interest costs incurred. We had previously assumed more aggressive margins for its subsidiary, CFG. However, as a result of higher operating costs for CFG and lower fishmeal prices, hence, lower contributions, we have revised our 08F 09F forecasts for PAH down by 17%-21%. Relevance: Nonetheless, we remain positive of the Groups prospects, with growth largely buoyed by CFG. Our TP is revised to S$0.99 as we lower our forecasts and peg our valuations at blended FY08/09F earnings. Our TP presents a 33% upside. Currently, this counter is trading at an undemanding 8.9x and 6.8x on FY08F and FY09F earnings respectively. Maintain BUY. |
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