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The Edge - Brokers' Digest (Sept10 - Sept16, 2007)
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decarn
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09-Sep-2007 13:18
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China Sunsine Chemical Holdings (Sept 6: 35.5 cents) TP: 50 cents OUTPERFORM (initiating coverage). China Sunsine Chemical Holdings is involved in the production of rubber chemicals, essential for rubber production. Capacity of its key product, rubber accelerators, is slated to expand 56% to 50,000 tonnes a year by end-2009, making the company the world's largest rubber accelerator producer. Sales and profits are set to grow 28% and 24% of CAGR for FY2007-2009. Growth should be fuelled by the 56% expansion in rubber accelerator capacity and contributions from new rubber chemical products. The projected three-year EPS CAGR for FY2007-2009 is lower at 13%, owing to share capital dilution post-IPO. The target price of 50 cents, based on 12x CY2008 earnings, is in line with international peers Lanxess and Chemtura. - CIMB-GK Research (Sept 5) Macquarie MEAG Prime REIT (Sept 6: $1.23) TP: $1.32 MAINTAIN BUY. Revenue growths were tepid at 5.5% y-o-y and 1.1% q-o-q to $23.6 million. Net property income did better sequentially, improving 4%. This was due to lower expenses related to lease renewal commission and depreciation. DPU for 2Q2007 was 1.5 cents. MMP remains one of the few real estate investment trusts (REITs) with a low P/B ratio. This low valuation means it is likely to be more resilient in market uncertainty. Since our last report (April 2007), MMP's share price has corrected about 2%. It is trading at just under 1xP/B and implies that the market has not factored in growth. With a DPU yield of 5% and a capital value upside of 8%, total return of over 13% is possible with little downside risk. Fair value of $1.32. - OCBC Investment Research (Sept 5) Singapore Food Industries (Sept 6: 84.5 cents) TP: 75 cents HOLD (initiating coverage). SFI is an integrated food company headquartered in Singapore. The group is aggressively exploring more opportunities in the UK/ Europe geographical region - its core market, accounting for 58% of sales. SFI's share price seems to outperform relative to its financial performance despite being profitable every year since listing and consistently achieving ROE of at least 20%. Based on it historical average, we believe the stock should trade at a fair value of 75 cents. As it is currently trading at a premium of 10.7% and given the mature domestic outlook, coupled with bad tidings on the Australian and Chinese market, we are initiating coverage with a 'hold' recommendation. - SIAS Research (Sept 4) CMZ Holdings (Sept 6: 26.5 cents) TP: 37 cents BUY (initiating coverage). The company produces and sells zippers to the mid0ragne to high end of the garment industry. We like CMZ for three primary reasons: (a) no replacement product for zippers; (b) focus on the mid-range to high-end market; and (c) for the last two consecutive years, its Chima brand was named one of China's top 10 zipper brands. It is one of the designated suppliers to international brands such as Calvin Klein. The 12-month price target of 37 cents represents an upside potential of 54%. Our target price is based on a target multiple of 10x FY12/2008 EPS, which we feel is reasonable, in view of its robust earnings growth outlook. Management targets a 20% dividend policy for FY12/2007. - SBI ES-Capital Securities (Sept 3) Midas Holdings (Sept 6: $1.37) TP: $1.84 MAINTAIN BUY. Midas announced that the proposed joint venture with Northeast Light Alloy Co (Nela) has not received regulatory approval. Thus, we have lowered our FY2008 earnings by 9.5% to $64.7 million. We remain positive on the group, however, as its core business and the Nanjing Puzhen JV should still help drive healthy growth. We have adjusted our target price of $1.84, based on 24x FY2008 earnings. Our target multiple has been lowered from 27x to 24x to reflect the slower earnings growth from the loss of the Nela JV. However, with earnings CAGR still robust at 50% from FY2006 to FY2009, driven by the existing core business and the Nanjing Puzhen JV, PEG at 24x FY2008 earnings remains undemanding at less than 0.5x. - DBS Vickers Securities (Sept 5) Sinwa (Sept 6: 69.5 cents) TP: 82 cents MAINTAIN BUY.For 1H2007, Sinwa's revenue rose 12.8% to $59.4 million while earnings jumped 41.5% to $5 million, mainly driven by the buoyant offshore marine activities in Australia and Singapore. Gross and net margins improved 0.5 percentage point and 1.7 percentage points respectively. EPS increased 23.2% from 1.85 cents to 2.28 cents. The issuance of 33 million new shares in February helped increase total equity as well as cash and equivalents. The 1H2007 results are in line with our earlier forecast and we maintain our target price of 82 cents a share. Our projected valuation represents a 29% potential upside. At this level, it will be valued at 16.3x FY2007 and 9.2x FY2008 earnings. - SIAS Research (Sept 5) Read More... |
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