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The Edge - Brokers' Digest (Oct 22 - Oct 28, 2007) Post Reply Rate topic
decarn Member	20-Oct-2007 17:02        decarn About Contact  Quote this Post!
x 0   x 0  Alert Admin	Cheung Woh Technologies (Oct 18: 28 cents) TP: 37 cents - 31 cents MAINTAIN BUY. For the half year ended Aug 31, 2007, Cheung Woh's net profit rose 86.8 % to $4 million on the back of a 28.9% increase in turnover to $43.7 million. Owing to a less than proportionate increase in the cost of sales, gross margin improved 4.3 percentage points. Cheung Woh has recommended an interim dividend of 0.5 cent per ordinary share, five times the 0.1 cent paid out in the corresponding period last year. We are raising our earnings forecast for the year from $7.7 million previously to $9 million. Cheung Woh is currently trading at 8.4 times our FY2008 EPS estimate of 3.4 cents. Pricing Cheung Woh at a forward PE of between 11 and 12 times, we derived a 12-month target price range of between 37 cents and 41 cents. - SIAS Research (Oct 15) Ezra Holdings (Oct 18: $7.25) TP: $8.05 UPGRADE TO BUY. Ezra Holdings surpassed market expectations with a record FY2007 net profit of $104 million, up 68 % y-o-y, while topline surged 98 % to $219 million. Its performance was boosted by its Offshore Support Services (OSS) business and rising chartering rates. Stripping away the net gain of $49 million from the dilution of its interest in EOC Ltd and other gains, Ezra's recurring net profit grew at a five-year CAGR of 73 % to $48.9 million. We believe the buoyant outlook, especially with current high oil prices, justifies a re-rating of the stock to 18 times FY2008 earnings. We are raising fair value estimate to $8.05, giving a potential upside of 15 %. - OCBC Investment Research (Oct 17) Oculus (Oct 18: 38.5 cents) UPGRADE TO NEUTRAL. Oculus has dropped initial plans to acquire hydropower plants in China in favour of a reverse takeover with Aretae Pte Ltd, an environmental solutions company, for $600 million via an issue of 1.2 billion shares at 50 cents each. Aretae is positioned to benefit from the implementation of the Kyoto Protocol in 2008. Management of Aretae has provided an EBITDA guarantee of not less than $50 million for FY2008 and FY2009. In addition, its current portfolio of projects is expected to generate 50 million metric tonnes of carbon credits, which are tradable and could be a potential booster to earnings. - DMP & Partners Securities (Oct 17) China Auto Electronics Group (Oct 18: 73 cents) TP: $1.16 BUY (initiating coverage). China Auto Electronics designs, assembles and manufactures wire harnesses, connectors, moulds, crimping machines and electronic modules for the automobile industry. China Auto's net profit is anticipated to rocket 283 % y-o-y to 117.2 million renminbi ($22.77 million) in FY2007, due to strong operating leverage. Its net profit in FY2008 is expected to be further boosted by reduction in tax from 33 % to 25 % for Chinese companies. We project China Auto to achieve high net profit CAGR of 136% in our FY2007-2009 forecast. Our fair value on the counter is $1.16, using 15 times FY2008 PE and implying an undemanding 0.1 times PEG. - DBS Vickers Securities (Oct 16) Golden Agri-Resources (Oct 18: $1.39) TP: $1.78 BUY (initiating coverage). Golden Agri Resources is the world's second-largest oil palm plantation company in terms of planted hectarage and the largest in terms of total landbank. Golden Agri is also top three in terms of oil yield. Valuation-wise, recent stock price outperformance has put it nearly on par with most large-cap peers. Nevertheless, given (i) its size, (ii) long-term growth prospects, (iii) foothold in Indonesia and (iv) bullish industry outlook, we are recommending Golden Agri as a core holding for exposure to the plantation sector. In terms of valuation, Golden Agri is trading at between 14 to -16 times PE based on earnings for the next two years. Target price of $1.78, based on 20 times FY2008 earnings. - OSK Research (Oct 17) Sihuan Pharmaceutical Holding Group (Oct 18: 83 cents) TP: $1.35 MAINTAIN BUY. Sihuan entered into a sale and purchase agreement to acquire Shenzhen Sihuan Pharmaceutical from three independent parties for 60 million renminbi ($11.65 million). Shenzhen Sihuan recorded a net profit of 3.1 million renminbi for FY2006 and 8.5 million renminbi for 9M2007. The price of 60 million renminbi represents 19.6 times the net profit of FY2006. We expect net profit growth of 93.1 % and 34.1 % for FY2007 and FY2008. Based on our free cash flow to equity model with a discount rate of 12% and terminal growth rate 2 %, we derived a fair value of $1.35, which is 15.6 times of forward 12-month earning and 13.5 times of FY2008's earnings (45 % upside). - Phillip Securities Research (Oct 12) ComfortDelGro Corp (Oct 18: $1.96) TP: $2.27 MAINTAIN BUY. Higher capex related to fleet upgrades, plus higher oil prices, have us fine-tuning earnings and reducing DCF fair value on ComfortDelGro. The company's overseas investments will drive near-term growth with recent acquisitions in bus and taxi operations in Australia and China, as well as the UK, likely to contribute more significantly to earnings in FY2007F and FY2008F. With the earnings cut and increased capex spend assumptions, our fair value now stands at $2.27 (previous: $2.65) based on DCF (method unchanged). Group ROE remains at 16%, while the dividend yield remains relatively attractive (5.6% for FY2007F, 4.4% for FY2008F). Implied upside is 16 %. - Nomura Singapore (Oct 18) K-REIT Asia (Oct 18: $2.80) TP: $3.31 BUY (initiating coverage). Apart from Keppel Land's income support for One Raffles Quay (ORQ) till 2011, we believe the ORQ acquisition paves the way for potential injection of more prime properties under partial ownership from the Keppel Group. Almost 70% of K-Reit's total NLA (ex-ORQ) is up for renewal from FY2008 to FY2010. Free float is likely to improve to over 42.2 % from 27.9%. K-Reit offers a three-year DPU CAGR of 28.3 %, one of the highest among S-REITs under coverage. Our target price of $3.19 includes the acquisition of ORQ and other prime Singapore office properties from the Keppel Group. We estimate K-Reit is worth $3.31, including a 12-month distribution per unit of 12 cents. - Citigroup Research (Oct 17) Singapore Press Holdings (Oct 18: $4.52) TP: $5.84 BUY. SPH reported recurring earnings (profit before investment income and exceptional items) of $434.2 million (+ 20.2 %). The maiden profit of $47.8 million from the sale of the Sky@eleven condominium was included in the recurring earnings. Excluding the Sky@ eleven contribution, recurring earnings would still have grown 7%. FY2007 full-year DPS of 26 cents is slightly below our forecast of 26.5 cents. The FY2007 dividend payout as a percentage of recurring earnings is about 96 %, lower than the 103 % figure for FY2005 and the 106% figure for FY2006. Nevertheless, we forecast DPS of 32 cents in FY2008 and have raised our target price from $5.39 to $5.84 (implied FY2008 dividend yield of 5.5 %). - Kim Eng Research (Oct 15) Copyright Disclaimer Read More...
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