Local Brokerages Stock Call 14 May 2013

From OCBC:
Golden Agri-Resources: Upgrade to BUY on valuation ground
Golden Agri-Resources (GAR) posted 1Q13 revenue of US$1430.1m, weighed down by lower CPO prices; but still managed to meet 22% of our full-year forecast. We estimate that core earnings came in at around US$113m, down 30% YoY but up 176% QoQ, and also met 23% of our FY13 forecast. Management noted that the better showing came from lower operating expenses, improved performance at its China operations and the sell-down of inventory, which came as a big relief. While CPO prices may still remain weak in the near term, headwinds appear to be dissipating; management is also remaining fairly upbeat about its prospects as it continues to expand its integrated operation capabilities to benefit from the firm industry outlook. Coupled with the recent fall in share price, GAR now looks relatively attractive with a 19% upside to our unchanged S$0.63 fair value (based on 12.5x FY13F EPS). Hence from a valuation standpoint, we upgrade our call from Hold to BUY. 

City Developments Limited: Still executing well
1Q13 PATMI came in at S$137.7m, down 12% YoY mostly due to the absence of a disposal gain from the Tagore Avenue warehouse sale in 1Q12, partially offset by gains from strata units sales in non-core industrial assets. First quarter PATMI now makes up 26% of our full year forecast, which we judge to be in line with expectations. In 1Q13, the group launched two projects, the 912-unit D’Nest and 868-unit Bartley Ridge, of which 87% and 62% of total units have been sold – a reasonably firm set of performances. The group’s hotel subsidiary, M&C, reported a soft set of first quarter numbers, with 1Q13 PATMI down 29% YoY due to a room refurbishment program that removed over 100k room nights and more difficult sector conditions. Maintain HOLD on CDL with an unchanged fair value estimate of S$12.04 (15% RNAV disc.).

Goodpack Limited: Catalyst delayed
Goodpack’s 3Q13 results met our expectations with revenue growing 3.0% YoY to US$44.8m on the back of continued gains from its synthetic rubber segment. Although operating expenses fell slightly and operating profit increased by 7.5% to US$16.3m, higher financing expenses caused PATMI for the quarter to fall 5.9% to US$10.9m. Entering 4Q13, we reduce our revenue projections following a delay in IBC usage for two new synthetic rubber contract wins back in 2Q13 but still expect a decent showing for its 4Q13 results. While we deem its recent share price decline to be overdone, our fair value falls to S$1.80 (S$1.95 previously) due to the lack of a near-term catalyst. Downgrade to HOLD.

Nam Cheong: 1Q net profit up 8% to RM35.8m
Nam Cheong Limited’s revenue and net profit increased by 14% and 8% YoY to RM234.7m and RM35.8m respectively. Gross margin declined to 18.6% from 22.6% in the year-ago period, mainly due to lower utilization of its vessel fleet. The group also had a disposal gain of RM2.8m, relating to one SSV. Separately, Nam Cheong announced the sale of five vessels worth US$110m, relating to one 5,150 bhp AHTS and four PSVs. The group, which already has an existing net order-book of RM1.3b, plans to expand its shipbuilding programme to 28 vessels for 2014 (2013: 19 vessels). We continue to like the group for its growth profile and keep our BUY rating and fair value estimate of S$0.30 unchanged.

Viz Branz Limited: Best operating margins since FY10
Viz Branz’s 3Q13 results was in-line with expectations with a decline in revenue offset by continued margin improvements due to the favourable raw material cost environment. While we lowered our FY13 projections to account for the seasonally weaker 4Q13, we expect margin improvements to persist and VB should remain on track to record a better FY13 performance in terms of PATMI growth. In addition, its growth prospects in its key China market remain decent. We leave our fair value estimate unchanged at S$0.74 and keep our BUY rating on the counter. In terms of the likelihood of a GO, we remain steadfast in our assertion that it will materialize, albeit at a later date and with a potentially different acquirer. 

From Maybank KE:
Super Group: Fresh coffee, Fresh perspective; Buy, TP $6.30
SUPER SP | Mkt Cap USD2.2b | ADTV USD2.0m
1Q13  results were within expectations. Recurring net profit growth of
30% yoy were driven by higher revenue and better margins.
While  we  expect  margins  to moderate over the next few quarters, we
still expect strength due to 1) higher-value products coming on stream and
economies of scale.
With  resilient  earnings  and  a  free  cash  flow  which  will  grow
exponentially  from next year, we think it is now appropriate to value the
stock  on  a  DCF  basis, which yields a fresh TP of SGD6.30, implying 30%
upside from here.
 
Bumitama: Off To a Slow Start; Buy, TP $1.24
BAL SP | Mkt Cap USD1.4b | ADTV USD0.8m
1Q  is  traditionally  the  weakest quarter in terms of FFB output.
Coupled  with  low  CPO  ASP  achieved,  BAL’s  1Q13 core net profit of
IDR152m  (-20%  QoQ,  -20%  YoY)  met  18% and 16% of our and consensus
estimates   –   within  our  expectations  but  slightly  below  street
estimates.
We  expect  stronger  performance  in  2H13  on seasonally stronger
production and higher CPO ASP to drive earnings growth for 2013.
Maintain  BUY with unchanged TP of SGD1.24 TP on 16x FY14 PER, with
implied 0.9x PEG.
 
Wing Tai Holdings: “Verticas” Earnings Climb; Buy, TP $2.64
WINGT SP | Mkt Cap USD1.5b | ADTV USD1.8m
We  reiterate  our  BUY  recommendation  on  Wing Tai as its 3QFYJun13
results  beat  all expectations with the surprise contribution from its KL
project, Verticas Residences. Our target price has been raised to SGD2.64.
On  the back of the contributions from Verticas Residences, Wing Tai’s
9MFYJun13  PATMI  came in at 115% of our Street-high estimate, and 124% of
consensus forecasts. We have raised our FYJun13 forecast by 36%.
Sales at Helios Residences remained slow but steady (~10 units sold
in  the  quarter).  At  0.75x  P/B and 0.6x P/RNAV, we believe Wing Tai
remains very undervalued.
 
China Minzhong: Volume Growth to Offset Margin Decline; Buy, TP $1.36
MINZ SP | Mkt Cap USD541.4m | ADTV USD7.9m
We  continue  to  like Minzhong’s growth outlook and the alliance with
Indofood  post its 3Q FY13 results. Maintain our BUY rating and our target
price at SGD1.36.
3QFY13  bottom line growth of 6% was disappointing. But we believe the
revenue  growth  could  be  more than offsetting the decline in margin. We
still look at double digit net profit growth going forward.
Current 3.8x FY14 PER seems not justified for a double-digit growth
company  in  our  view.  The  next  catalyst  for the stock will be the
potential dividends next quarter.
 
Goodpack: Another slow quarter; Hold, TP $1.75
GPACK SP | Mkt Cap USD773.4m | ADTV USD0.4m
3Q13 results were below expectations, with revenue growth continuing to
decelerate on slower business activities in existing segments.
Revenue  grew  3%  yoy, while net profit declined 6% yoy, despite cost
savings coming through from more efficiency in US and Europe.
With  no  earnings growth visibility nor clear catalyst in place at
least  over the next 1-3 quarters, the stock is likely to underperform.
Our  new  TP of SGD1.75 is pegged to 17x FY13F, in-line with historical
5-year average. 

From DBS:
Singapore banks have rallied strongly after the release of
1Q13 results. But our banking analyst believes this is as
strong as it could get fundamentally. All eyes will remain
on NIM for any upside surprises as other P&L levers are
largely stretched. Consensus has raised earnings
expectations to show 1% growth from 1% earnings
contraction before. We are keeping our 3% earnings
growth projection for 2013. Expect some consolidation in
the near term; take profit. We believe regionalisation
efforts would re-rate the Singapore banks in the longer
term. Maintain HOLD on OCBC; TP at S$11.50. We have a
Fully Valued call on UOB, TP S$20.10.

3Q13 bottomline for Goodpack was below on lower fleet
expansion and Intermediate Bulk Containers (IBC)
turnaround. We have trimmed FY13/14F estimates by
3%/7% on slower demand recovery. Nevertheless, we
remain optimistic on Goodpack’s fundamentals and
growth prospects from FY14 on the back of market share
gains in synthetic rubber (SR, especially in Russia and
Singapore) and autopart segments. While earnings are
expected to grow 19% q-o-q going into the seasonally
stronger 4Q with contribution from non-rubber products
and maiden Russian SR sales, we would like to await
macro and industry data for cues. Downgrade to HOLD,
with a lower TP of S$1.90 (Prev S$ 1.95).

Nam Cheong’s 1Q13 earnings were up 8% y-o-y to
RM36m, largely in line. The pace of vessel sales is ahead
of expectations. The latest new vessel sales contracts for 5
vessels worth US$110m improve revenue visibility further.
FY13/14F earnings were raised by 4%/14%. The Group
remains well on track to deliver on its newbuild
programme of 19 vessels in FY13 and 25 vessels in FY14,
underpinning net profit growth trajectory of 20% CAGR
over FY12-14. Maintain BUY with higher TP of S$0.36
(Prev S$ 0.30).

1Q13 core net profit of Rp151.5bn for Bumitama Agri
made up only 15% of our initial FY13F. High cost of
logistics and jump in third party FFB pushed costs up.
FY13F/14F/15F earnings cut by 13%/6%/3%; TP lowered
to S$1.12 (Prev S$ 1.18). HOLD maintained for 11%
upside to revised TP.

First Resources reported 1Q13 core net profit of
US$63.6m (+25% y-o-y; -17% q-o-q). This represented
35% of our full year forecast - ahead of expectations.
Despite the strong results, we are putting our forecasts
under review due to lower than expected yields. Will
provide more updates.

1Q13 earnings for Super Group were in line, driven by
higher gross margins and ingredients segment. FY12-
FY14F 20% CAGR growth will be supported by Branded
Consumer and Food Ingredient segments. Maintain Buy
with higher TP of S$5.35 (Prev S$ 4.68).

1Q13 earnings for City Developments dipped 12% y-o-y,
and account for 20% of our full year forecast. The drag
came largely from lower residential and hotel revenue.
Looking ahead, residential activities offer visible earnings
stream while hotel operations continue to face
challenges. Maintain Hold, TP S$12.33.

Wing Tai reported 3Q13 net profit of $94.6m, bringing
9M13 bottomline to $255.3m, ahead of our expectations.
Looking ahead, the group plans to market The Tembusu,
a 337-unit freehold development along old Tampines Rd
in the coming months. In addition, the group has another
project along Prince Charles Crescent (JV with UEL,
Metro) that is scheduled to be marketed in coming
months. This provides earnings and cashflow visibility for
FY14. Current TP of $2.33 under review, likely to remain
Buy with a slightly higher TP.