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THE EDGE ISSUE - AUG 13 - AUG 19, 2007. *NEW
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evideo
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12-Aug-2007 18:44
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Sunday, August 12, 2007 The Edge - Brokers' Digest (August 13 - August 19, 2007) Courtesy of http://my-personal-finance.blogspot.com/ Aqua-Terra Supply (Aug 8: 51 cents) TP: 84 cents BUY (initiating coverage). ATS is an integrated service provider and procurement specialist to the oil and gas industry. ATS's growth momentum will be augmented by it success in securing projects; more cross-selling opportunities as it taps into the growing business network of KS Energy, which is its parent company; and its proven growth-by acquisition strategy to expand product offerings and regional customer network. We forecast ATS's net profit to grow 84% y-o-y to a record $14.2 million in FY2007. Its net profit compound annual growth rate (CAGR) is expected to be 42% in our FY2007-09 forecast periods. Fair value is at 84 cents, using 15x FY2008 PER. - DBS Vickers Securities (Aug 6) ECS Holdings (Aug 8: 63 cents) TP: 69 cents MAINTAIN BUY. ECS recorded revenue growth of 23% to $688.7 million in 2Q2007 on continuing strong demand for notebooks. Gross profit grew 15.2% to $30.9 million on lower gross margin of 4.5%, attributable to a higher mix of notebook distribution and fulfillment business. For 2Q2007, reported net profit after minority interests grew 17.8% to$6.2 million. We are raising our FY2007 revenue and net profit forecast to $2,746.2 million and $25.8 million, respectively. Maintaining our recurrent free cash flow (RFC) yield at 7%, we are raising our RFC fair value to 69 cents, which is 9.6% higher than the last traded price of 63 cents. Projected dividend yield of FY2007 is 2.8% and projected total return will be 12.4%. - NRA Capital (Aug 6) Hongguo Int'l Holdings (Aug 8: 98 cents) TP: $1.45 UPGRADE TO BUY. Hongguo reported 1H2007 net profit after tax (NPAT) of 56 million renminbi, up 21% y-o-y, which was inline with market expectations. Sales came in 6% below our 362 million renminbi forecast. The shortfall was more than offset by average selling price increases on CBanner, which helped boost gross profit margin from 38.1% to 40.5%. On the back of new store openings, we fine-tune our 2007E-08E EPS from 30 cents to 20 cents and from 39 cents to 38 cents, respectively. Hongguo is currently trading at 16.2x 2007E PER and 12.1x 2008E PER. While we cut our return on invested capital-based (ROIC) price target to $1.45 from $1.50, our revised price target implies an excess return of 51%. - UBS Investment Research (Aug 7) Beauty China Holdings (Aug 8: $1.19) TP: $1.65 BUY (resuming coverage). BCH used to be a brand management company that owns and manages two cosmetic brands, Colour Zone and CharmingLady, which targeted China's mass market. Now BCH also produces cosmetic products in CHina, which makes it an integrated cosmetics player. Its Colour Zone products are now distrubuted via 1,275 outlets throughtout China. We estimate net earnings for FY2007 and FY2008 at HK$168 million ($32.5 million) and HK$211 million, respectively, which translates into a growth of 24.4% and 26.1% in the next two years. Based on 21x, 18x and 14x PER for FY2006, FY2007 and FY2008, we arrive at a fully diulted fair value of $1.65 per share (upside of 41%). - Phillip Securities Research (Aug 3) Ezra Holdings (Aug 8: $5.95) TP: $7.80 MAINTAIN BUY. Aside from securing ConocoPhillips for decommissioning work in the planned shutdown of the Bayu Undan platform in the Timor gap, the group has also secured work for the provision of services by the vessel as part of a US$888 million ($1.34 billion) sub-sea installation project in Southeast Asia for a national oil company. We have upgraded our EPS by 11% and 10% for FY2008 and FY2009, respectively. We have also raised our target price from $6.90 to $7.80, based on a PEG of 0.5x, which translates into FY2008 PER of 16.5x. Ezra's successful penetration of new markets and buildup of its capabilities suggest it could be the next emerging blue-chip in the offshore exploration and production market. - Kim Eng Research (Aug 8) Interra Resources (Aug 8: 30 cents) TP: 12.1 US cents MAINTAIN HOLD.Interra had a tough year in FY2006 when it took a huge debt impairment charge and investment write-off thanks to unreliable payment stream from its Myanmar partner. The year also marked a turnaround in the group's balance sheet. After an asset sale, Interra ended the year with a net cash position. Fiscal year 2007 looks to be a much better year. As a group, Interra's financial result is highly volatile. It had a net loss in FY2004, a healthy net profit in FY2005, another net loss in FY2006 and is expected to generate profit again in FY2007. Due to this volatility, NAV is the best way to value the company. As at March 31, 2007, the group's NAV per share was 12.1 US cents. - Phillips Securities Research (Aug 7) China Dairy Group (Aug 8: 44.5 cents) TP: 59 cents MAINTAIN BUY. CDG's revenue grew 10.8% y-o-y to $109.9 million and net profit grew 4.8% y-o-y to $7.5 million. It is on track to achieve our forecast of a 16% y-o-y growth in FY2007 net profit to $16 million. Its liquid milk segment spurred growth, with revenue up 18.5% y-o-y, while its milk powder segment posted a 4.8% y-o-y decline in sales. Gross profit grew 17.4% y-o-y to $33.6 million, but profit before tax (PBT) rose only 7.3% y-o-y to $8.8 million, as distribution costs, which grew 28.7%, eroded margins. At 12x FY2007 PER, CDG is trading at a heavy discount to its peers. We maintain our FY2007 forecast for revenue of $230.6 million and net profit of $16.1 million. Ta4rget price is 59 cents. - OCBC Investment Research (Aug 7) FibreChem Technologies (Aug 8: $1.36) TP: $1.98 MAINTAIN OUTPERFORM. 2Q2007 net profit of HK$144.3 million was above our expectations on a combination of strong revenue, margin improvements and muted tax. While 1Q2007 profits only clocked in 22% of our FY2007 forecasts, 2Q2007 compensated for the seasonally slow start and pushed 1H2007 profits to 52% of our full-year forecast. Dividend per share (DPS) of one Hong Kong cent was also declard. We raise FY2007-08 EPS by 9%, on new nylon bicomponent contributions and higher-than expected margins for microfibre leather. Our DCF target price is raised from $1.78 to $1.98. Our new target price implies 12.7x CY2008 PER, little changed from the previous implied multiple of 12.5x CY2008 PER. - CIMB-GK Research (Aug 7) Inter-Roller Engineering (Aug 8: 90 cents) TP: 90 cents DOWNGRADE TO SELL. Removing the $10.6 million net gains after tax from its sale of properties, IR:'s net income for 1H2007 plunged 31% y-o-y to $9.2 million. Even stripping out the foreign exchange (forex) loses/gains for both periods saw PBT fall about 15% y-o-y. Group net margins have fallen from between 16.5% and 17.5% for FY2005/2006 to 11.9% in 1H2007. DPS is cut from 1.5 cents (2Q2006) to one cent (2Q2007). We have lowered our new order estimates for FY2007E and FY2008E to $130 million and $160 million, respectively. We also cut group earnings estimates between 26% and 31%, reduced dividend payout forecasts from 60% to 50%. Target price is lowered from $1.10 to 90 cents. - Citigroup Research (Aug 7) China Printing & Dyeing Holdings (Aug 8: 26.5 cents) TP: 48 cents MAINTAIN BUY. CPD reported a 30.3% improvement in revenue to 328.1 million renminbi ($65.6 million) in 1H2007, due to increased sales across all product segments. Domestic sales were boosted by the 27.2 million renminbi of initial orders of weft-elastic- slubby yarn to Wal-Mart. Gross margin dipped by 0.4 percentage point to 18.7%, owing to the strengthening of the renminbi, lowering of export tax rebates and increasing material costs. Net profit improved by only 16.5% to 34 million renminbi (accounts for 40% of our full year earning estimates). Trading at 5.3x FY2007F PER and 4.3x FY2008 PER, CPD is really a cheap buy after the recent market correction. Our target price of 48 cents is based on 8x FY2008F EPS. - Westcomb Securities (Aug 7) GP Batteries Int'l (Aug 8: $1.46) TP: $1.42 UPGRADE TO HOLD. GP Batteries reported a pretty mixed set of results for 1Q2008. While revenue showed a 22.8% y-o-y rise to $229.8 million and gross profit increased 42.5% to $50.9 million, it included a $13.9 million realized gain on commodity contracts. Net profit showed a strong 50.9% y-o-y jump to $3.4 million, but was also distorted by an exceptional gain of $16.7 million (divestment of TCL stake) and an unrealized loss of $26.4 million on commodity contracts. We also can expect some good news from the one laptop per child programme, which is finally taking off, although high nickel prices could still affect GPB's profitability, Fair value raised from $1.13 to $1.42. - OCBC Investment Research(Aug 7) Kingsmen Creatives (Aug 8: 66.5 cents) TP: $1.25 MAINTAIN BUY. Kingsmen's bottomline surged 65% y-o-y to $2.83 million, accounting for 42% of our full-year forecast. Based on historical trend, 2H could contribute some 60% to full year earnings. Hence, we are confident that the group will meet our earnings forecast of $6.7 million. its retail interiors division was the star performer, with revenue jumping 51% to $27.3 million. Order books for the group as at June already hit $93.2 million, representing 71% of our full-year revenue target. The 12-month price target of $1.25 is based on our sum of the parts (SOTP) valuation. In fact, stropping out the net cash estimated at $19 million in FY2008, the stock trades at a mere 6.2x earnings, certainly far from a king's ransom. - Kim Eng Research (Aug 8) Courage Marine Group (Aug 8: 38 cents) TP: 48 cents MAINTAIN BUY. Courage Marine benefits from recovery in bulk carrier rates and opportunistic deploying of its vessels. Its vessels are mostly on short-term charter. The management's strategy to operate a fleet of low-cost, used vessels is paying off in terms of low depreciation and holding costs for its vessels. Shrewd dependence on cost-competitive yards in China for services and replacements parts further lowers its operating costs. With continued strong demand for commodities, bulk carrier rates are expected to stay high. The management has committed and fulfilled a pledge to pay 50% of net profit as dividend. The 12-month target price is 48 cents. - DMG & Partners Securities (Aug 6) Hi-P Int'l (Aug 8: 69.5 cents) TP: 72 cents SELL. Net profit of $13.5 million (-11% q-o-q, -6% y-o-y) missed our forecast by 10% due to softer wireless sales contribution and start-up costs. Revenue mix did not surprise much; P&G (Poland) drove consumer sales by 10% q-o-q to reach $89 million but Motorola's weakness resulted in a 4% q-o-q decline in wireless. RIM (Blackberry) grew well and reached 35% to 40% of wireless sales. We cut our estimates by 8% to 14% over 2007-2009E and now forecast 2007E net profit to reach $61 million (+7% y-o-y) on back of softer revenue and margin enhancement. Our 12-month target price of 72 cents is based on a fair value multiple of about 9x 2008E earnings. - Citigroup Research (Aug 6) Midsouth Holding (Aug 8: 74.5 cents) TP: $1.01 MAINTAIN BUY. Top line grew 33.4% y-o-y to 136 million renminbi and net profit rose 35.8% y-o-y to 30.8 million renminbi. The strong 2Q2007 showing is due to the rise in demand for its fibre reinforced plastics (FRP) parts for heavy vehicles (up 36.8% y-o-y) and energy-saving FRP doors and windows (up 19.2% y-o-y). Gross profit margin remained healthy at 32.8%, while net margin hovered at 22.6%. We like MIDS for its exposure to China's big spending on infrastructure development and its trucking trend. We look forward to a stronger 2H2007 that can contribute up to 60% revenue and net profit. Fair value is at $1.01 (32% potential upside). - OCBC Investment Research (Aug 6) SembCorp Industries (Aug 8: $5.40) TP: $6 MAINTAIN BUY. SCI's 2Q2007 net profit grew by 42% to $129.6 million from 2Q2006's $91.2 million. This is despite turnover growing by a lackluster 3.5%. This was due to a decline in utilites truneover arising from maintenance and repair of its gas turbines in Singapore, lower contribution from its industrial parks and the deconsolidation of turnover from its Vietnam industrial parks. Net profit forecasts are unchanged, as the lower than expected contribution for utilities in this quarter was sufficiently offset by the marine division. Net profit forecast for FY2007 remains at $527.3 million. Its three-year forward organic earnings CAGR is a robust 17.5%, on the back of th the buoyant marine business and the expansion of its utilities business. We are adjusting our SOTP target price to $6 from $5.85. - Kim Eng Research (Aug 8) Swiber Holdings (Aug 8: $2.95) TP: $4.18 MAINTAIN BUY. We see 2007 as Swiber's watershed year for new contract wins, after having secured US$211 million new offshore engineering, procurement, construction, installation and commissioning (EPCIC) year-to-date. This includes the biggest offshore EPCIC contract from Shell Brunei, worth US$146.6 million. Total value for year-to-date new orders is already 4.5x the total offshore EPCIC contract values that Swiber obtained in 2002 to 2006. This sets the stage for strong earnings growth momentum in our FY2007-09 forecast period, with an impressive three-year recurring net profit CAGR at 92%. We have re-rated our fair value to $4.18; using 18x diluted recurring FY2008 PER. - DBS Vickers Securities (Aug 6) United Overseas Bank (Aug 8: $21.20) TP: $23.30 UPGRADE TO BUY. UOB reported 2Q2007 earnings of $585 million, up 32% y-o-y (excluding one-off items) and higher than market estimate of $511 million (based on Dow Jones poll). Net interest margin improved from 1.97% in 2Q2006 to 2.04% in 2Q2007. Net customer loans grew 7.3% over last December to $82,461 million as at June. Fee and commission income grew strongly, up 45% y-o-y and 27% q-o-q to $330 million. Management has declared a special dividend of 15 cents and an interim dividend of 20 cents, or a total of 35 cents. We have raised our Fy2007 earnings estimate from $2,088 million to $2,227 million. We expect fee income to remain strong in 2H2007 and have raised our estimate from $1,042 million to $1,195 million. Retain fair value estimate of $23.30. - OCBC Investment Research (Aug 8) SembCorp Marine (Aug 8: $5.50) TP: $7.90 BUY. SMM's 2Q2007 results were within our expectations with net profit, excluding $10.1 million exceptional gain from the sale of Kristiansand rig in 2Q2006, rising 81% y-o-y to $86 million. We expect 2H growth to be driven by continuing progressive recognition of its order book, whcih currently stands at $8.3 billion. Target price of $7.90 uis based on 20x shop-repair earnings and 18x rig-building and conversion earnings, 25x earning from Cosco Shipyard Group and valuing SMM's 6.7% stake in Cosco Corp using our target price of $6.10. Assuming that SMM continues with its 75% dividend payout ration, yield is still attractive at 3% for FY2007 and 4.2% for FY2008. - DBS Vickers Securities (Aug 3) Swissco Int'l (Aug 8: $1.15) TP: $1.77 MAINTAIN BUY. Swissco is expanding its fleet to participate more actively in the regional offshore oil and gas market. Swissco's earnings in our FY2007-09 forecast periods will benefit through higher vessel deliveries over 2007-08; higher value charter contracts for its rising fleet of offshore support vessels; and high utilization rates for its fleet in the midst of buoyant offshore and port activities in Southeast Asia. We project 25% revenue CAGR in our FY2007-2009 forecast periods. Our SOTP valuation has raised the fair value for Swissco to $1.77, due to the re-rating of its 9% stake in Swiber. - DBS Vickers Securities (Aug 6) Venture Corp (Aug 8: $14.80) TP: $18.50 MAINTAIN BUY. Revenue of $1 billion (34% y-o-y) was-in-line with our forecast , but net profit of $79 million (50% y-o-y) was ahead of our $67 million estimate on the back of strong gross margin (19.8%) and $7 million forex gain. Revenue growth is driven largely by Retail Solutions (GES) and other core business segments like P&I but networking were largely flat q-o-q. Management expects more customers/products to be added and to contribute stronger in 2H2007E forecast. The firm declared eight cents interim dividend. We raise our target price to $18.50, based on forward 2008E earnings and fair value multiple of about 15x PER. - Citigroup Research (Aug 5) Stamford Land Corp (Aug 8: 59 cents) TP: 71 cents HOLD. Revenue increased by 53.1% to $73.3 million in 1Q2008. Net profit surged by 169.9% to $6.9 million in the same period. The sale of 11 units of the Stamford Marque project in Sydney was the main contributor to the results' improvement. Net margin jumped 76.4% to $9.4 million in the first financial quarter. Better margin was due to property sales' higher margins and higher revenue per available hotel room. At 67.5 cents, Stamford Land is trading at a forward PER 2008 of 19.8x. The industry is trading at 19.4x forward PER, 2.6x P/BV and 2.6% dividend yield. Using a blended approach of 19.4x PER 2008 and a conservative discounted free cash flow to equity, we derive a target price of 71 cents. - SIAS Research (Aug 3) Tsit Wing Int'l Holdings (Aug 8: 28 cents) TP: 26 cents MAINTAIN HOLD. Revenue improved 11.3% to HK$174.5 million due to growth in the coffee and grocery products segments. Sales from black tea remained flat y-o-y. Owing to the increasing material costs of raw coffee beans and black tea, gross profit improved marginally by 2.4% to HK$68.8 million. Hence, net profit attributable to shareholders increased a miserable 1.6% to HK$18 million (from HK$17.7 million). We raised our revenue estimates by 4% to 5% largely due to the higher-than-expected growth in the sales contribution from the hotels and major food chain restaurants segment. Our derived target price dropped to 26 cents on 7x blended FY2007/08 EPS. - Westcomb Securities (Aug 7) Vicom (Aug 8: $1.80) TP: $2.27 BUY. Net profit grew 19% to $10.3 million in FY2006 on the back of a 13% increase in revenue. For 1Q2007, earnings grew a further 48% y-o-y to $3.5 million, driven by higher volume of vehicle inspection checks. Based on its 1Q2007 results, we project the company to deliver net earnings of $14 million for FY2007. Taking advantage of its dominant position, the company raised inspection fees for motor vehicles by about 4% this year. It has enough tax credits to pay out an additional 16 cents per share in dividends. The stock is still trading at an undemanding 10x FY2007 PER. We believe the stock can trade up to 12x PER, or $2 per share, with the uptrend in earnings and potential special payout. In the event that a sale of Setsco materializes., the stock could edge up to $2.27 per share. - Kelive Research (Aug 8) |
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evideo
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11-Aug-2007 15:22
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THE EDGE ISSUE - AUG 13 - AUG 19, 2007. BUY/SELL/HOLD *NEW
COVER PAGE : SUBPRIME MORTGAGES, CDOs and CHINA(Page 22 - 27) COVER STORY : DBS leaps into CHINA - DBS to acquire securities house in China.(Page 23 - 24) COVER STORY : US Subprime loan fears ripple across global markets. (Page 25) COVER STORY : How runaway global liquidity has boosted the property market. (Page 26) COVER STORY : Five Penny stocks that could rise from the ashes (Page 27) - AZTECH, CHALLENGER TECNOLOGIES LTD, CHINA MILK PRODUCTS GROUP, TELECHOICE INTERNATIONAL LTD, KODA LTD. From containment to contagion (Page 2) It's SHOWY time (Page 3) Economy grows at fastest pace in two years (Page 4) BNP Paribas : Singapore dollar to rise to record (Page 4) Lorenzo expects property boom to drive sales, expands capacity (Page 6) Parkway Life REIT launches IPO amid heightened market volatility (Page 8 ) Keppel loses steam, SCI powers on. (Page 10) Cosco grows order book faster than Keppel and SembMarine (Page 12) Keppel better off without KT&T and K1 (Page 12) HSBC is first foreign firm to form China Rural Bank (Page 14) SubPrime crisis creates Asian 'buying opportunity' (Page 14) Asia-Pacific company bond risk rises on central bank cash boost (Page 14) Baker Tech sells core business, possible further move into shipyards (Page 16) Hiap Hoe on a high as projects roll in (Page 16) How an ugly brand wowed the world (Page 18 ) China's trade surplus beats estimates (Page 19) LMA's earnings weighed down by legal costs and lower profit margins (Page 20) ICICI Bank : No exposure to subprime market (Page 20) Another taxi company in itself may not be the solution (Page 21) China stocks hold up amid global turbulence (Page 24) Banking on Synergy Drive's future (Page 28 ) A dam with no use (Page 28 ) Singapore economics (Page 29) Potential for 'major stress' in US (Page 30) Market spooked (Page 31) Jaya Holdings - The tide is turning for Jaya Holdings (Page 32) FibreChem Technologies - Synthetic leather production to drive strong earnings growth (Page 32) Casablanca lures stock-market investors (Page 33) Wynn, Okada pact may thrive when Japan allows casinos (Page 35) Top guns hike stake in Advanced Holdings (Page 38 ) Increasingly oversold (Page 44) It's time to stick with quality (Page 44) CITY & COUNTRY : WHEEL them over - The Singapore Flyer (Page CC 1) Wheel them over - Who's at the flyer (Page CC 6 - 7) BROKERS DIGEST : Aqua-Terra Supply Co - BUY (Initiating Coverage) (tp = 84 cents) ECS Holdings - MAINTAIN BUY (tp = 69 cents) Hongguo Int'l Holdings - UPGRADE TO BUY (tp = $1.45) Beauty China Holdings - BUY (resuming coverage) (tp = $1.65) Ezra Holdings - MAINTAIN BUY (tp = $7.80) Interra Resources - MAINTAIN HOLD China Dairy Group - MAINTAIN BUY (tp = 59 cents) FibreChem Technologies - MAINTAIN OUTPERFORM (tp = $1.98 ) Inter-Roller Engineering - DOWNGRADE TO SELL (tp = 90 cents) China Printing & Dyeing Holdings - MAINTAIN BUY (tp = 48 cents) GP Batteries Int'l - UPGRADE TO HOLD (tp = $1.42) Kingsmen Creatives - MAINTAIN BUY (tp = $1.25) Courage Marine - MAINTAIN BUY (tp = 48 cents) Hi-P Int'l - SELL (tp = 72 cents) Midsouth Holdings - MAINTAIN BUY (tp = $1.01) SembCorp Industries - MAINTAIN BUY (tp = $6.00) Swiber Holdings - MAINTAIN BUY (tp = $4.18 ) United Overseas Bank - UPGRADE TO BUY (tp = $23.30) SembCorp Marine - BUY (tp = $6.10) Swissco Int'l - MAINTAIN BUY (tp = $1.77) Venture Corp = MAINTAIN BUY (tp = $18.50) Stamford Land Corp - HOLD (tp = 71 cents) Tsit Wing Int'l - MAINTAIN HOLD (tp = 26 cents) Vicom - BUY (tp = $2.27) PERSONAL WEALTH SECTION : Weathering the STORM (Page PW 1) Managing clients' personal balance sheets (Page PW 2) Fidelity eyeing high-yield markets (Page PW 3) China's new sovereign wealth fund and its impact on global markets (Page PW 4) Hedge funds, LBO funds face collapse in credit rout (Page PW 6) Hedge fund chiefs find managing 'tail risk' a challenge (Page PW 6) Bill Miller's US$22 billion value trust hurt by US homebuilders (Page PW 7) BlackRock's CIO Bob Doll isn't worried about a market slump (Page PW 8 ) Impending Oil swan dive (Page PW 9) Are 130/30 funds worth the hype ? (Page PW 12) OPTIONS SECTION : The Ascott Interview - Sensory appeal (Page OP 1) Boarding at Leisure (Page OP 4) Sense of Time (Page OP 8 ) When East meets West (Page OP 10) When the week ends (Page OP 11) Car for the Clan (Page OP 12) VOLUME MOVERS : Yongnam Holdings Ltd Jade Technologies Holdings Ltd Armarda Group Ltd The Lexicon Group Ltd HOT STOCKS : DBS - Oversold, temporary rebound (a breakout of $22 would test a price of $23) Great Eastern Holdings - Possible rebound (Resistance at $19, Support at $18.40. A break above $19 could trigger a rally to $22) OCBC - Set for temporary rebound (Resistance at $9.20, Support at $8.20) VENTURE CORP - Poised for a breakdown. UOB - Oversold, temporary rebound. OSIM - Set to break down (Set to decline to 45 cents) |
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