Towards Financial Freedom

DBSV S'pore Wired Daily 5 October 2012

kiasutrader
Publish date: Fri, 05 Oct 2012, 10:01 AM

Today's Focus
Plantation Companies ' Exit on rebound. Top pick: Bumitama

The build-up to tonight's US September jobs data continues with initial jobless claims (actual 367k, consensus 370k) and factory orders (actual -5.2%, consensus -5.9%) coming in better than expected last night. Consensus sees tonight's September non-farm payrolls coming in at 115k with an unemployment rate of 8.2%.

DBSV Research has cut CY12F/13F/14F CPO prices by 8% to 9% to RM3,020/2,940/2830 on higher inventories. But recent drop in CPO prices is excessive. We believe CPO should fundamentally revert to RM2,800 in 4Q12. Plantation stocks have stayed relatively more resilient, but at 14.1x forward PE, the sector is now close to fair value. We recommend to exit when CPO and plantation counters recover. For SGX-listed stocks, sell-on-strength First Resources (HOLD, TP: S$2.03). Our top buy pick remains Bumitama Agri(BUY, TP: S$1.25).

In terms of earnings revision on the back of lower CPO price forecasts, FY12F-14F earnings for First Resources were lowered by 12-27%. TP reduced to S$2.03 on softer earnings outlook. Our analyst expects 3Q12F profit of between US$37-41m, down c.23% q-o-q. For Indofood Agri Resources, FY12-14F profit reduced by 3-6%; 3Q12F profit expected to decline 17- 24% q-o-q. Maintain HOLD, TP reduced to S$1.25 (Prev S$ 1.40).

Mewah's earnings were reduced by 0-3% for FY12-14F on lower sales outlook due to weak Malaysian CPO exports. Maintain FULLY VALUED call (TP: S$ 0.38) for now. However, there is a speculative element to the stock. According to press reports, the Malaysian government is considering a cut in CPO export taxes to 8-10% from 23%. The matter is expected to be brought up to the cabinet today. If successful, Malaysian refiners will again be able to compete against their Indonesian peers. Assuming Mewah's bulk operating profit/MT recovers to the average during FY08-10 of c.US$37/MT from US$29 this year and consumer margins increases by 50% from US$56, our analyst estimates FY13F profit will jump by 114%. In this scenario, our TP would be raised to S$0.54.

FY12-14F earnings for Wilmaradjusted by 2-4% on new CPO and soybean oil prices. Expect 3Q12F profit of US$280- 322m (+62-87% q-o-q) on improved M&P margins. TP lifted to S$3.25 as we rollover to FY13F base year. Maintain HOLD.

Bumitama is still growing strong, offering 3-year profit CAGR of 24% despite trimming FY12-14F CPO price forecasts. The stock is best-in-class with CPO production growth of 29% p.a. over next 3 years. Expect 3QFY12 profit of Rp162bn (- 15% q-o-q). Maintain BUY, TP revised to S$1.25 from S$1.30. Technically, we see the stock rangebound from $1 to $1.08 in the short term.

SembCorp Marine's Jurong Shipyard has signed an LOI with Prosafe for a second semisubmersible accommodation rig. We believe this could be the exercise of one of two options granted to Prosafe when it ordered a similar unit back in December 2011, for US$292m. We believe the contract value could be around US$300m, using the value of the first order as a benchmark. This order, if confirmed, brings SMM's YTD order wins (ex shiprepair) to S$9.5bn, or S$2.6bn ex- Petrobras. We have a full year order wins assumption of S$11.9bn. No change to our numbers. Prosafe now has options for 3 accommodation semisubs worth c. US$900m. This latest unit, expected to be delivered in 2015, signifies SMM's further penetration into the accommodation semisub market. Maintain BUY on SMM with TP unchanged at S$5.85. SMM remains a key beneficiary of the current upcycle of deepwater, harsh environment rigs.

ST Engineeringsaid that its electronics sector, ST Electronics, has won about S$166m worth of contracts for its rail electronics and satellite communications and sensor solutions in the third quarter of 2012.

SC Global had been engaged in discussions on possible investment and equity participation in various overseas projects including those located in South East Asia and some cities in Greater China. It has recently made a bid to acquire an overseas resort hotel development but was unsuccessful in its offer. The group would continue to look for opportunities to expand its overseas business and regional diversification plan. SC Global last traded at 0.87 P/BV NAV and at about 48% discount to RNAV. Whilst downside risk is limited given its current valuations, we see little upside catalyst in the near term for the stock as its cashflow generation from existing projects remains slow.

Global Logistics Properties announced that it has signed a new lease agreement of approximately 39,000sqm to Arata Corporation, a major Japanese wholesale company, for a consumer goods distribution centre in GLP Settsu in Greater Osaka, Western Japan. This is the third lease agreement between GLP and Arata, which has existing leases at GLP Nara, also in Greater Osaka, and GLP Funabashi in Greater Tokyo.

Europtronic Groupwill report a loss for the 3QFY2012 results due mainly to provision or write-off of cost of investments in projects in HK and Shenzhen and operational loss due to weak demand in the electronic components market.

In property news, the executive condominium (EC) market is facing a potential supply glut as the government rolls out a record number of EC sites. A total of 25 EC sites (from both Confirmed and Reserve list) were released to the market via the Government Land Sales (GLS) programme between H1 2010 and H2 2012. Some 5,600 units are expected to come on stream by end-2013, which translates to an average annual supply of 4,500 units, according to Jones Lang LaSalle (JLL). By comparison, the average annual supply over the last two years has been about 3,600 units, with average take-up of 3,300 units.

Source: DBSV 
Related Stocks
Market Buzz
Discussions
Be the first to like this. Showing 1 of 1 comments

sh2383jbt

Anyone can tell, possible Mewah can rebound back to ipo price at 1.10? It is almost drop 60% from the ipo.

2012-10-24 22:53

Post a Comment