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Investors’ Corner
Investors' Corner | 21 November 2008
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Sino Techfibre
Price – $0.185 Target – $0.43

Sino Techfibre’s (STF) revenue grew 7% for 3Q08 while NPAT fell 2.7% y-o-y. The slight growth in top line was mainly on the new contribution from Pattern Moulding Paper (PMP). Its 9M08 revenue is just another Rmb400m short of our FY08E of Rmb1.45b. NPAT has already hit Rmb341.2m for the same period, needing another Rmb97.1m to attain our FY08 forecast. While 4Q08 is a more challenging quarter in terms of the operating environment, our estimates should still be met as seasonally, 2H tends to be stronger and PMP should, as well, continue to grow. For 3Q08, ASPs showed a pronounced drop versus 3Q07. We have factored in cuts to our FY09E by 10 – 15% for STF’s other segments to reflect further deterioration of market demand in 2009; PMP ASP assumed to remain flat. Our 12-month target price is 4.5x FY09E EPS. The stock currently trades at 1.9x FY08/09 P/E, with a yield of 8.3% and 10.3% respectively. Maintain BUY. – DMG & Partners (17 Nov)

Celestial NutriFoods
Price – $0.38 Target – $0.74

Celestial NutriFoods’ 3Q08 results was within expectations. Due to an unrealized translation gain of Rmb63m, net profit was up 55%. Excluding one-off items, net operating profit would have fallen by 11.7%. As expected, overall gross margins had declined due to record high soybean prices in 2Q08 and higher proportion of sales from lower margin industrial products. Average soybean costs were up 61% y-o-y but prices have come off by more than 30% since. Net cashflow from operations for 3Q08 was Rmb205m, but offset by capex investment of Rmb439m and repayment of bank loan. Management is cognizant of a possibility of an early redemption of its convertible bonds in Jul-09 and is assessing refinancing options and looking to conserve cash resources which could preclude dividends for FY08. Valuations are undemanding at 3x FY08F and only 2.7x FY09F earnings. Positive factor is continued weakness in soybean prices. Maintain BUY. – DBS Vickers (18 Nov)

Silverlake Axis
Price – $0.15 Target – $0.19

Silverlake Axis’ weak set of 1Q09 results was due to global financial weakness causing many of its customers to delay IT investments. Management noted that this has impacted its business, in particular, the SIBS licensing. As a result of the sharply lowered revenue, net profit plunged 67.1% q-o-q. Even if we exclude the forex impact, sequential earnings decline was still around 40.6%. Overall, the results were poor, meeting just 6.5% and 2.8% of our revenue and earnings targets, respectively. Outlook remains muted, as banks are expected to focus on cut-backs. As for its SIBS licensing, management believes that upgrades for its core banking software are expected to continue, albeit at a much slower pace. Due to the poor start to FY09, as well as the uncertain economic outlook, we believe earnings could remain lumpy. We are paring back our FY09/10 earnings estimates by 51% and 42% respectively and reducing our valuation multiple from 10x to 8x FY09F. Downgrade to HOLD. – OCBC Investment (18 Nov)

Swiber Hldgs
Price – $0.55 Target – $1.38

Swiber Hldgs’ (Swiber) 3Q08 dip in gross margins was due to third-party chartering to support an increased number of offshore projects. Management guided that gross margins should be reinstated to 25-30% from FY09 onwards as it takes delivery of more construction vessels. The deferment of the Equatorial Driller was mainly due to volatile credit markets and the potential strain on Swiber’s balance sheet, which is positive in the current environment. Currently the drilling division will continue to focus on executing a US$25m contract from Nucoastal, Thailand starting Dec-08 as well as outsourcing project management services to drilling companies. Currently, Swiber is bidding for US$4.2b worth of contracts. About 53% of our FY09 revenue forecast is backed by secured contracts. We assume US$500m of new orders for 2009. Our target is based on 6x FY10 EPS. Key catalysts include better-than-expected results and order wins. Maintain OUTPERFORM. – CIMB-GK (18 Nov)

Sino Techfibre  -- -- --   
Business: [FY10 Turnover] PU (46.0%), Microfibre (37.8%), PMP (16.2%)

Insight: Apr-11, Co announced that the fire which broke out... Read More
Silverlake Axis  0.470 -0.005 -1.05%   
Business: Provides software solutions & svcs. [FY18 Turnover] Maintenance & enhancement svcs (M&E) (72.7%), software licensing (10.1%), software project svcs (6.7%), insurance processing (5.4%), credit & cards processing (3.4%), sale of software & hardware (1.7%).

Insight: Feb-19, 1H19 revenue jumped 27.8% to RM336.2m due ... Read More


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