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Investors’ Corner
Investors' Corner | 06 June 2008
Related stocks:

Allgreen Properties
Price – $0.98 Target – $1.46

Allgreen has corrected 21% from $1.30/share to $1.03/share in the last month due to the anticipated removal from MSCI Index on 30 May. We think the weak price presents a good buying opportunity, as the stock has more than priced in the weak residential sentiment in Singapore. We believe the NAV of $1.42/share is a conservative estimate of NTA of the company. At 1Q08, Allgreen’s investment properties were valued at $1.05/share, while the residential properties at $0.79/share is held at cost. With 75% of 1Q08 net profit coming from its investment properties, it had a healthy interest cover of 8.3x, due to conservative gearing of 0.38x. We believe Allgreen has outstanding payment of $44.6m for Regent Garden and around $380m for equity contribution to the JV it committed to with Kerry Properties for 5 sites in China in late 2007. These should not be a strain on cashflow given the strong cashflow from its investment properties. We reiterate our BUY rating. – UBS Investment (02 Jun)

Indofood Agri Resources
Price – $2.51 Target – $3.34

Outlook for the palm oil industry is still looking positive. We believe Indofood Agri Resources’ (IFAR) age profile of trees favourably positions it to enjoy the benefits of current high CPO prices. IFAR completed its acquisition of 56.41% interest in Lonsum on 30 October 2007. For 1Q 2008, with Lonsum’s contribution, IFAR’s CPO production was 170,000 tonnes. This 161% YoY jump in production was one of the main contributors to IFAR’s strong 1Q 08 results. In time, the consolidation of both estates will generate greater cost efficiencies, increase productivity, economies of scale and improved yields. This will decrease IFAR’s unit cost of production, ensuring a highly competitive business model. With the global trend of higher consumption of palm oil and the present high CPO price, we believe that IFAR is in a sweet spot for growth, especially with its high ratio of mature acreage. Initiate with a BUY. – DMG & Partners (02 Jun)

Soilbuild Group Hldgs
Price – $0.95 Target – $1.40

Net profit remained steady at $6.2m on the back of a 9.9% YoY increase in revenue to $31.7m. The increase in revenue was due to contributions from One Tree Hill and Espa development projects as well as higher recurring income from its investment properties. If no new projects are sold, we expect $246m worth of revenue from previous sales to be recognised this year. Underlying assumptions include the completion of One Tree Hill and Espa this year and recognition of 20%, 35% and 50% of the sales value of Centrio, Leonie Park and Montebleu respectively. We project FY08 revenue from investment properties to be around $9.5m. Under the extreme assumption of no new properties sales, and given no delays in construction schedules, total revenue would come in around $255m. For now, we assume Soilbuild to be able to make a few more sales and project FY08 revenue to be $275.6m. Following lack of sales activity of the remaining Leonie units and sluggish market sentiment, we have lowered our price target to $1.40. BUY. – SIAS Research (02 Jun)

Raffles Education Corp
Price – $1.33 Target – $1.75

Raffles Education (RLS) management organised a briefing for analysts to communicate further details on its two JVs with Educomp, which were announced on 27 May-08. We received greater clarity on management’s rationale for initiating the tie-ups – essentially to develop both greenfield and brownfield schools in India together, and to modify and subsequently, rollout Educomp’s successful education content software model across the Chinese market. While both JVs could take time to contribute meaningfully in terms of revenue and profits, we believe that a partnership between two of the strongest education brand names in the region is mutually beneficial to both parties, given their strong presence and deep local experience in their respective markets. RLS has continued to soundly place its bets on the secular growth of Asia’s middle class market, where rising incomes and aspirations should continue to insulate demand for education services from economic cycles. Maintain OUTPERFORM. – Credit Suisse (03 Jun)

Indofood Agri Resources  -- -- --   
Business: Diversified agri-business mfg & retailing cooking oil, with oil palm, rubber & sugar plantation in Indonesia. [FY18 Turnover] Edible oil & fats (75.4%), plantations (24.6%).

Insight: Apr-19, 1Q19 revenue rose 5.3% due to higher sales... Read More
Raffles Education Corp  -- -- --   
Business: Co is the largest private education group in Asia-Pacific. [FY18 Turnover] Education (81.6%), education facilities rental service (13.6%), real estate investment (4.8%).

Insight: Feb-19, 1H19 revenue fell 0.3% to $48.7m due to ch... Read More

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