From CIMB:
Dominating the budget segment
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Shop n
Save’s 57 stores will be re-branded into Giant stores from today. Dairy
Farm’s retreat from the budget segment highlights Sheng Siong’s
competitive positioning in this space. We upgrade to Outperform (from
Neutral) on evidence of Sheng Siong’s dominance in the budget segment.
Our estimates are maintained. We raise our target price, which is based
on a higher applied multiple of 23x CY14 P/E (previously 18x) on a 5%
discount to Dairy Farm (previously 20%). We see catalysts as earnings
delivery from new stores and continued store expansion.
From OCBC:
SMRT Corporation: More impairments?
We view the recent goodwill impairment announcement as a way for SMRT’s new management to turn the page on its past overseas ventures although the timing did take us by surprise. While the Shenzhen ZONA venture failed to yield the desired results, its performance only turned negative over the past two quarters. Nonetheless, we feel that management review of existing operations is still ongoing, and we could see further impairments – particularly on the SG bus business – down the line. In the interim, we expect to see a net loss in excess of S$4.3m for 4QCY13, and a possible halving of FY12’s final dividend. As we roll our valuations forward to include FY15, our fair value declines to S$1.51 from S$1.62 previously with higher operating expenses and a lack of growth opportunities to blame. We maintain HOLD on SMRT and reiterate our view that an inflection point is unlikely anytime soon.
United Envirotech: Inks another project in Jiangsu
United Envirotech Ltd (UEL) has recently inked an agreement worth RMB200m (S$40m) with the local government of Siyang County, Jiangsu Province, China for TOT (Transfer-Operate-Transfer) and BOT (Built-Operate-Transfer) projects in an industrial park for the textile industry. Management intends to finance its latest investment using proceeds from the previous convertible bond issue to KRR and bank financing. Based on its usual 40% equity/60% debt financing model, UEL would need around S$5.6m for Phase 1 of the TOT project, which should not be an issue as it is currently sitting on ~S$63.2m of cash (as at 31 Dec 2012). In light of the latest investment, we bump up our FY14 estimates for revenue by 1.5% and earnings by 4.9%; this in turn raises our fair value from S$0.88 to S$0.90, still based on 13x FY14F EPS. Maintain BUY.
Singapore Press Holdings: Acquires vehicle online classifieds site
SPH announced that it has entered into a sale and purchase agreement to purchase SGCM Pte. Ltd. which owns and operates vehicle online classified sites (including the popular sgcarmart.com), a car auction platform, and performs online marketing. In addition, it is also a service provider for car loans, insurance and settlement services. The maximum aggregate consideration payable is S$60m and would be made in cash. We see this acqusition to be a logical one and part of SPH’s continued expansion into online media advertising. We would speak further with management regarding this acquisition and, in the meantime, maintain BUY with an unchanged fair value estimate of S$4.94
From UOB KH:
Lum Chang Holdings - Inexpensive contractor with
strong financials (LCH SP/NOT RATED/S$0.33) With a strong construction orderbook of S$600m and its new executive condominium project at Woodlands to be launched in Apr 13, LCH’s construction arm is likely to be kept busy
STX OSV Holdings (SOH SP, MS7) –
Technical BUY with +8.9% potential return Last price: S$1.23 Resistance: S$1.34 Support: S$1.20 The stock is now known as VARD. BUY with a target price of S$1.34 with tight stops placed below S$1.19. Prices appear to be forming an interim bottom near S$1.20 and its RSI indicator is still hovering above a reading of 40. Its Stochastics indicator has formed a bullish crossover in the oversold region. A break above S$1.26 is likely to increase its odds for further upside.
Blumont Group Ltd (ADRT SP, A33) –
Technical SELL with +17.6% potential return Last price: S$0.635 Resistance: S$0.665 Support: S$0.54 SELL with a target price of S$0.54 with tight stops placed above S$0.665. Prices have now formed a potential tweezer top and its RSI indicator, which has broken above a reading of 80, looks poised to turn lower. Its Stochastics indicator has formed a bearish crossover in the overbought region. Watch to see if its MACD indicator could form a bearish crossover as well and if the stock could still be supported by its 25-day moving average.
From DBS:
Cambridge REIT - Unlocking hidden value in its portfolio.
BUY, TP raised to S$0.93
The coming few years could be transformational for
Cambridge REIT (CREIT). With a number of its the master leases rolling off, we believe it is an opportune time for CREIT to relook at potential re-development or asset enhancement plans within its portfolio, which based on estimates, can reap a further 2.6m sqft GFA. This is a potential 35% expansion in rentable space, which could raise rental income by up to c44%. The potential collective sale of Lam Soon Industrial Buidling (LSB) if completed is likely to unlock substantial gains for CREIT, which currently own a 69.2% stake in the property. Our base case scenario of a collective sale, assumes a fair value of S$277m for LSB, implying an attributable profit of S$82.3m (S$0.07 / unit) for CREIT. Maintain BUY, TP raised to S$0.93 (Prev S$ 0.75). From Maybank KE: STX OSV: A Bargain Hunt; Initiate with BUY; TP SGD1.66 SOH SP | Mkt Cap USD1.2b | ADTV USD7.7m We initiate coverage on STX OSV (VARD) with a BUY rating and TP of SGD1.66, pegged to 9x PER on average FY13-15F earnings. With a potential capital upside of 35% and FY13F dividend yield of 4.9% (which can rise to 7.3% in FY15F), the stock is a steal. Share price has been de-rated and suppressed due to the lowball offer (SGD1.22/sh) by Fincantieri for STX Group’s 50.75% stake. With the sale concluded, the overhang on share price has been removed and VARD should re-rate positively to at least peer valuation levels. We believe that weakened ordering activity from 2H12 is short-term in nature and foresee a pickup towards 2H13. We believe the market has been overly cautious and underestimated the potential strength of a recovery. The cautious mood sets the stage for positive surprises when ordering activities pick up faster and stronger than expected. From RHB DMG: SPH: Paying a maximum of SGD60m in cash for online car portal sgCarMart (SGCM) (NEUTRAL, S$4.48, TP: S$4.30) Our thoughts: This acquisition does not come as a surprise – SPH has been involved in a number of acquisitions in recent times which includes Australia’s ACP Magazines for SGD58m in 2011, Eastern Holdings’ exhibition business for SGD43.5m in 2010, ShareInvestor for SGD12m in 2008, HardwareZone for SGD7.1m in 2006 and Blue Inc for SGD33m in 2004. We think that this acquisition will bode well and is accretive for SPH given that its overall portfolio of online businesses are currently loss making. We are NEUTRAL on SPH with a TP of SGD4.30. SMRT: Cutting Target Price On Profit Warning (SELL, S$1.54, TP: S$1.37) SMRT has announced that it is expecting to report a net loss for 4QFY13 due to deteriorating profitability as well as a SGD17m impairment of goodwill in its associate Shenzhen ZONA Transportation Group. We are lowering our FY13 and FY14 earnings by 21.1% and 7.2% respectively. Maintain SELL with lower TP of SGD1.37 (from SGD1.43 previously) based on DCF. This implies a FY14 P/E of 19.9x. Baker Tech: Charting New Growth Path ( S$0.44, UNRATED) We met up with the management team of Baker Tech (BTL) and came away with a positive view on BTL’s strategic plans. In the mid-term, BTL’s expansion into rig ownership through Discovery Offshore (DISC) will drive EPS growth in FY13-14F. DISC could be eyeing more rigs and BTL might continue to raise its stake in DISC. BTL trades at FY12 excash core P/E of 11.5x and could compress to 6.2x in FY14F. Unrated. Valuation: Trades at 11.5x FY12 ex-cash core P/E. Sea Deep can deliver a steady annual net profit of SGD14.6m. Adding that to our estimate of SGD12m net profit from DISC in FY14, this will raise BTL’s FY14F net profit to SGD26m, translating into FY14F ex-cash P/E of 6.2x. Sheng Siong Group We recently hosted Sheng Siong for a roadshow and came away more confident that management would be able to raise its gross floor area by 10% annually for FY13/14 as 17 new possible locations have been identified. Given the higher future growth rate, we raise our valuation multiple from 22x to 24x to derive a higher TP of S$0.69. At last close at S$0.65, valuations appear rich. Downgrade to Neutral. |
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