Thursday, November 14, 2013

DBS Vickers Report 15 Nov 13

Thai Beverage downgraded to Hold with TP $0.57
(previous $0.80), technical downside bias to $0.49 or
even 0.45
3Q13 core net profit for Thai Beverage grew by 36% y-o-y to
THB4.1bn, from THB3bn in 3Q12, despite revenue falling by
7% to THB35bn. The growth came largely from contribution
of its associate stake in FNN. Stripping out FNN’s profit
contribution, ThaiBev’s net profit fell by 23% to THB3.7bn.
Our analyst revises forecasts down by 17%/ 20%/15% for
FY13F/14F/15F. We expect competition to remain keen for its
NAB segment while the Beer segment is likely to continue to
see declining volumes on the back of the recent hefty price
increase. We have also lowered Spirits’ gross margin
assumption to c.32%, from 34-34.5% previously. While we
like the strong cash generation of its stable Spirits business,
the projected slow ramp up and uncertainty in its other
segments would be a drag on overall growth. We expect
growth momentum to pick up meaningfully only in FY15F,
which is still some time away. With the downward revision in
earnings, our SOP-based TP is cut to S$0.57. In view of the
limited upside, we downgrade ThaiBev to HOLD. Technically,
we see downside bias to $0.49 or even $0.45.
Croesus Retail Trust (CRT) reported maiden gross revenue of
JPY1.998bn for the period from 10 May-30 Sep 2013, which
was 0.4% ahead of forecast. NPI was 3.1% higher than
projected and came in at JPY1.269bn, translating to a higher
NPI margin of 63.5%. Distributable income of JPY1.139bn
was 8.3% higher than projections and translates to a DPU of
3.26Scts. This was ahead of prospectus forecast of 3.11Scts,
and represents an annualised yield of c9.3%. Looking ahead,
earnings are likely to be driven by organic as well as
acquisitions. In the near term, the recent completion of a
1000sm extension at the property and fully leased by Uniqlo,
should provide another uplift to income. We maintain our
Buy recommendation with a TP of S$1.02. This offers a total
return of 25%.
Excluding biological gains of S$3.3m, Olam reported
1QFY14 core profit of S$42.3m (+28% y-o-y)
representing 11% of our forecast. This is slightly better
than expectations as 1Q usually constitutes 5-10% of full
year profits. Management expressed their optimism about
the company’s FY14 outlook.
US Indices Last Close Pts Chg % Chg
Dow Jones  15,876.2 54.6 0.3
S&P  1,790.6 8.6 0.5
NASDAQ  3,972.7 7.2 0.2
Regional Indices
ST Index  3,191.1 24.3 0.8
ST Small Cap  534.3 1.2 0.2
Hang Seng  22,649.2 185.3 0.8
HSCEI  10,391.1 114.5 1.1
HSCCI  4,431.1 57.1 1.3
KLCI  1,784.2 1.7 0.1
SET  1,415.7 10.9 0.8
JCI  4,367.4 65.5 1.5
PCOMP  6,327.9 6.9 0.1
KOSPI  1,967.6 4.0 0.2
TWSE  8,134.9 30.6 0.4
Nikkei  14,876.4 309.3 2.1
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 584
Total Daily Vol (m shrs) 2,343
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
14 Nov
Target Price
($)
Hutchison Port Holdings Trust Buy 0.685 0.82
ComfortDelgro Buy 1.905 2.19
OCBC Bank Buy 10.500 12.40
Singapore Airlines Buy 10.310 11.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
14 Nov
Target Price
($)
Ezion Holdings Buy 2.110 2.60
CSE Global Buy 0.960 1.11
Frasers Centrepoint Trust Buy 1.815 2.14
Yoma Strategic Holdings Buy 0.740 1.02
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
While operating environment remains challenging, Olam
is expected to see earnings growth stemming from
previous investments. Olam is trading at inexpensive
valuations of 11x FY14F PE and 1.1x P/BV against decent
ROE of 11% and EPS CAGR of 36% in FY13-15F.
However, we would like to monitor its earnings delivery
and sustainability of cash flow improvement for another
quarter or two before turning positive on the counter.
Maintain HOLD with DCF-based TP of S$1.60 (WACC
10%; terminal growth 1%).
Ezion’s 3Q13 results are slightly ahead of our above
consensus estimate. Recurring net profit climbed 137%
yoy and 5% qoq to US$38.2m on the back of fleet
expansion, commencement of two LNG projects at Curtis
Island and margin improvement. 9M recurring net profit
made up 73% of our FY13 estimate. Our implied 4Q13
net profit estimate of US$37.6 is on the low side.
Sequential growth should be expected as Ezion take
deliveries of a few more vessels in late 3Q to 4Q. More
updates pending results briefing.
Cosco Corp announced that it has secured contract
totaling over US$380m comprising: (1) newbuild contract
for two LeTourneau Supper 116E jack up drilling. To be
built at Dalian yard; scheduled for delivery by 1H16 and
2H16 respectively (2) newbuild of a 64k dwt handymax
bulk carrier for a European shipowner through the
exercise of option announced on 12 Sept 13. The vessel
will be constructed at Zhousan yard; scheduled for
delivered by 2H14. The latest wins lift Cosco's YTD new
orders to US$2.6bn, surpassing our assumption of
US$2.2bn. With these contracts, Cosco will have a total
of six jack up drilling rigs in orderbook, of which two will
be delivered to KS energy soon by end of FY13 and
1Q14. No change to our TP and recommendation. We
remain wary on its project execution in view of the
diversified product range and the shift of its Zhoushan,
Dalian and Guangzhou yards to take on more offshorerelated
projects.
US markets rose after Janet Yellen signalled she will
continue the FED’s stimulus efforts. Yellen, nominated to
be the next FED chair person, said the central bank
should take care not to withdraw QE too early from an
economy that is operating well below potential. US 10-
year treasury yield eased back to 2.69% with after rising
to as high as 2.79% in recent sessions

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