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The Edge - Brokers' Digest (Oct 8 - Oct 14, 2007) Post Reply Rate topic
decarn Member	06-Oct-2007 21:54        decarn About Contact  Quote this Post!
x 1   x 0  Alert Admin	Advance SCT (Oct 4: $1.02) TP: $1.34 MAINTAIN BUY. AAdvance SCT entered into a joint venture with a Chinese smelter company, to own and operate an existing copper smelter in China. This acquisition would also strengthen the group's position as a copper supply chain management provider. Meaningful contribution to the Group from this smelter is expected from 2008. We estimate earnings of $21.1 million for FY2007 (EPS: 8.5 cents) and $37.2 million for FY2008 (EPS: 13.8 cents). We compare Advance SCT with other environment stocks, namely water treatment companies. These are trading at an average of 12 times PE. Applying it to the average EPS for FY2007/2008, we arrive at a target price of $1.34. - DMG & Partners Research (Oct 3) China Haida (Oct 4: 31.5 cents) TP: 34 cents HOLD. The group saw 1H2007 revenue surging 36.1% y-o-y to 219.2 million renminbi ($43.26 million) due to higher contribution from its domestic sale of aluminium composite and single panels. Profit before tax grew a respectable 12.8% y-o-y to 24.4 million renminbi but this was eroded by a 151.8% increase in taxes that led to net profit falling 8.8% from 18.7 million renminbi to 17.1 million renminbi. The increase in prices of raw materials, especially aluminium, compressed Haida's gross margins from 20.7% in I H2006 to 17.3 % in I H2007. Using a discounted cashflow model, we peg the fair value per share at 34 cents, which offers limited upside potential from the current share price of 31.5 cents. - NRA Capital (Oct 2) SembCorp Marine (Oct 4: $5.25) TP: $6 MAINTAIN BUY. SembCorp Marine (SMM) has signed a memorandum of understanding with Brazilian engineering group WTorre to co-own and operate a shipyard in Rio Grande, Brazil. Most significantly, in a very explicit endorsement of the joint venture, Petrobras, Brazil's state oil company, is expected to sign a rental contract spanning 10 years. Our derivation is now set at 28 times our 2008 earnings estimate versus 21 times previously. SMM has traded at 22.5 times forward earnings and, as its order book visibility is stronger now, we believe this is justified. Furthermore, it reflects appropriately the re-rating of its Cosco shares, now worth 51 cents/ SMM share. Price target raised to $6 from $4.75. - UBS Investment Research (Oct 3) Celestial Nutrifoods (Oct 4: $1.49) TP: $2.10 MAINTAIN BUY. We saw the work-in-progress of the biodiesel plant. Production is expected to commence by the end of 2007. We remain positive on the company's prospects on the back of growing affluence, demand for health food and beverages and increasing consumerism in China. We have lowered our FY2007F net profit down by 5.8% as we increase our forecast of its interest expense (from its convertible bonds), higher effective tax and a lower gross margin due to higher soybean prices. We have also factored in contributions from its new products in FY2008F and FY2009F. Our target price is revised to $2.10 (premised on 15 times earnings) as we roll over our valuations to FY2008F. - DBS Vickers Securities (Oct 1) Fibrechem Technologies (Oct 4: $1.81) TP: $2.23 MAINTAIN OUTPERFORM. We visited Fibrechem's Xiamen facilities recently and noted two key developments. First, Fibrechem's microfibre product is gaining rapid customer traction. Second, the company is preparing to launch a new product, quite aggressively. In 2008, upstream expansion into polyester chips should give Fibrechem the ability to produce another new product. Our earnings estimates remain unchanged but with the major part of 2007 over, we have rolled forward our valuation basis to CY2008 from CY2007. Our target remains based on DCF valuation (WACC 12 %). Our new target implies 15.2 times CY2008 and 11.1 times CY2009 fully diluted PER. Raising target price from $1.98 to $2.23. - CIMB-GK Research (Oct 3) Singapore Telecommunications (Oct 4: $3.98) TP: $4.27 MAINTAIN OUTPERFORM. Singapore Telecommunications' diversified earnings base, liquidity and exposure to the world's fastest-growing mobile markets offer a unique investment proposition in an uncertain market environment. Based on the current prices of Singtel's other associates and our fair valuation of SingTel's Singapore operations, Indonesia's Telkomsel is trading at an implied 12.5 times CY2008 PER. India's Bharti continued to gain the largest share of new subscribers and outpace industry growth. Our sum-of-parts-valuation has been raised primarily on a higher target price for Bharti and changes in currency assumptions. Our earnings have been raised by 1 % for FY2008-2010 to reflect earnings upgrades for Bharti. Higher target price of $4.27. - CIMB-GK Research (Oct 1) China Essence Group (Oct 4: $1.13) TP: $1.38 MAINTAIN BUY. We have recently visited China Essence's new plant in Sui Ling, Heilongjiang. The facility, housing four potato starch production lines with an annual capacity of 80,000 tons, combined with the Daqing plant (60,000 tons capacity) and Alihe plant (40,000 tons), will boost the g roup's total capacity. Management is confident of ramping up its new capacity to achieve about 80% utilisation in the next six months. We tweaked our FY2003/2008F and FY2003/2009F net profit estimates upwards by about 2 % and 4 %, respectively, to account for the higher average selling price of potato starch. Rolling over our valuation to FY2003/2009F, our 12-month price target is raised to $1.38, still pegged at 12 times forward PER. - SBI E2-Capital Securities (Oct 2) Noble Group (Oct 4: $2.07) TP: $2.20 HOLD (resuming coverage). 1H2007 saw a 64% y-o-y growth in revenue to US$10.1 billion ($14.96 billion) and a corresponding 66% y-o-y improvement in net profit to US$99.5 million. The recent cut in the US Federal funds rate has many implications; one of which is the expected sustaining of economic activity due to lower borrowing costs. We expect continued demand for basic commodities. As we expect Noble to be a beneficiary of this trend, we are raising our FY2007 revenue and net profit forecasts to US$19.7 billion (previously US$14.8 billion) and US$192.5 million (previously US$158.0 million), respectively, and derive a fair value estimate of $2.20 based on 17 times blended FY2007/2008 PER. - OCBC Investment Research (Oct 3) Venture Corp (Oct 4: $16.20) TP: $18.90 MAINTAIN BUY. Venture was on a week-long roadshow with us from Sept 24 to 28, meeting almost 20 fund managers including shareholders in four major cities in the US. From the meetings we have had, it appears that many investors are not quite clear about Venture's differentiation from the run-of-the-mill contract manufacturers and thus have not been able to fully gauge the company's prospect. We are convinced that Venture's growth strategy is well mapped-out and its current position in the marketplace is stronger than ever. The key challenge going forward, in our view, would be execution and the retention of good talent in key business units. Target price of $18.90 based on 17 times FY2007 earnings. - DBS Vickers Securities (Oct 3) Copyright Disclaimer Read More...
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