Thursday, June 19, 2014

OCBC Report 19 Jun 14

KEY IDEA

Astro: Decent FY15 start but run-up overdone

Astro Malaysia Holdings Berhad (Astro) posted 1QFY15 revenue of MYR1253.9m, up 11% YoY (down 0.5% QoQ), meeting 22% of our FY15 forecast; net profit jumped 12% YoY and 15% QoQ to MYR128.3m, or nearly 26% of our full-year forecast. The company declared an interim dividend of 2.25 sen/share, versus 1 sen in 1QFY14, payable on 17 Jul 2014 (stock trades ex-dividend on 1 Jul). While management has maintained a pretty positive outlook, we note that there is limited upside to our new DCF-based fair value of MYR$3.75 (versus MYR$3.50 previously) after the recent run-up. As such, we opt to downgrade it to HOLD for now. We would be buyers again at MYR3.50 or better. (Carey Wong)


MORE REPORTS


Tiger Airways: Ceasing operations in Tigerair Mandala

Tigerair Mandala announced it will cease operations from 1 Jul-14 as Tiger Airways Holdings (TR), together with key shareholders Saratoga Group and PT Cardig International, decided to cease funding the airline. We view the cessation as a positive for TR in the mid- to long- term, noting that Tigerair Mandala contributed to S$55.5m of losses in TR’s FY14 results. It also affirms TR’s focus on its turnaround strategy towards an asset-light growth model, which we think is crucial for survival in the current overcapacity situation. However, in the near term we might see one-off costs to TR from: 1) impairment of the four planes at Tigerair Mandala should they not be re-deployed, sold or leased, 2) shutdown costs such as severance packages and ticket refunds, 3) write-downs in the event Tigerair Mandala is liquidated. We await more clarity on the possible near term costs associated with Tigerair Mandala. Meanwhile, we maintain our SELL rating and FV estimate of S$0.30. (Yap Kim Leng)  

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- US stocks rallied Wed, gaining the most in four weeks, after the Federal Reserve chief signaled no hurry to raise rates.


- The Singapore government will continue to supply shorter-tenure industrial sites in 2H14, reiterating that this will keep prices affordable for industrialists.

- Halcyon Agri Corp Ltd is in talks to buy rubber processing plants in Indonesia from Lee Rubber for S$400m to S$500m, three people familiar with the matter said.


- Shares in Asiatravel.com leapt more than 9% as talk that China-based e-commerce giant Alibaba could be poised for a stake in the company made a return trip to the market.


- Global Logistic Properties has signed new lease agreements totalling 47,000sqm with three leading companies in the retail industry in China.

- Noble Group announced that it has elected to redeem US$350m 8.5% perpetual capital securities on 21 Jul.

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