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Investors’ Corner
Investors' Corner | 04 September 2009
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By: Lai Wyai Kay
Articles (53) Profile

Genting Singapore PLC
Price – $1.01
Target – $1.14

We have raised our earnings forecast for 2010 by 160% because we now assume a full year of earnings from Sentosa, as opposed to our old assumption of six months. We have also doubled our assumption of VIP revenue to $600m p.a., following our recent visit and reassessment of the regional VIP market. We are still assuming a conservative mass market size of $2.4b (US$1.6b) of which we assume Sentosa will conservatively capture 50%. In Malaysia, the mass market is worth some US$1-1.1b (out of total gaming revenue of US$1.2b). Singapore has double the addressable population, and three times the income level in Malaysia. Even if Singaporeans had half the Malaysia propensity to gamble, we would be looking at a mass market size of some US$3-3.3b ($4.5-4.9b). As we near the January 2010 opening, project risk should decline and earnings visibility increase. Reiterate OUTPERFORM.
– Macquarie Research (31 Aug)

Singapore Airlines
Price – $12.86
Target – $9.00

Singapore Airlines (SIA) traded ‘ex’ the SATS entitlement in mid-August. SIA management estimates this distribution would have reduced NTA to $10.68 at the end of FY09. We expect losses in FY10 although the impact on net assets should be mitigated by increases in fair value reserves. This means we think SIA is trading in-line with mid-cycle levels. Our forecasts assume that passenger and cargo volumes recover over the course of the coming year and we expect y-o-y volume growth from the March quarter 2010 (despite capacity cuts). However, we expect yields to lag the traffic recovery due to competition in the aviation industry, y-o-y reductions in fuel surcharges and ultimately the reintroduction of latent capacity. We would be surprised to see SIA generate the yield premium it needs to justify the recent investment in its on-board product on the Boeing 777-300ERs. Maintain SELL. – UBS Investment (31 Aug)

Sinotel Technologies
Price – $0.44
Target – $1.04

Sinotel has established sizable market shares in 7 provinces and as at Jul-09, their orderbook stands at Rmb374m, 60% of which are 3G. For the next few years, 2G mobile networks will continue to dominate while 3G networks will grow rapidly. As each telco adopts its own 3G standard while maintaining their own separate 2G infrastructure, up to 6 wireless systems can be installed in each building. The rate of growth of new buildings and developments across the 1st– and 2nd–tier cities in China presents a very large and expanding pie shared among the 20-30 wireless infrastructure providers in China. On 6-Aug, Sinotel announced that they are in discussion to establish American Depository Receipt in the US OTC market. If successful, this will reduce the gap in valuations between Sinotel and China Grentech and be another potential source of funds. Initiate with BUY.
– AmFraser Securities (31 Aug)

Rickmers Maritime
Price – $0.415
Target – $0.16

Rickmers Maritime’s (RMT) increased cash retention following the 72% q-o-q cut in 2Q09 DPU is just a drop in the bucket compared to the immediate issues ahead of the trust. In order of urgency, RMT needs to 1) resolve LTV clauses that restrict access to loan facilities for the Hanjin vessels due in next five months; 2) secure waivers for LTV covenants on existing loans; 3) arrange payment of US$40m in vessel deposits and of loans that begin amortizing soon; 4) refinance the US$130m top-facility maturing in April 2010; and 5) finance the US$711.6m Maersk vessels due in 2H10. With the high level of leverage and sizeable acquisitions fixed at peak prices, we believe RMT is essentially behaving like a toxic asset. Our valuation reflects the likelihood and consequences of a distressed scenario. We now estimate no distributions are paid in 2H09 and FY10. Maintain SELL.
– OCBC Investment (1 Sep)

Genting Singapore  0.905 -- --   
Business: Develops, operates & mkts casinos & IRs globally, including Australia, M'sia, Philippines & UK. [FY18 Turnover] Gaming (66.1%), non-gaming (33.8%), others & invs (0.1%).

Insight: May-19, 1Q19, despite Co's non-gaming business reg... Read More
Singapore Airlines  9.240 +0.14 +1.54%   
Business: Co provides air transportation services to destinations spanning a network spread over 6 continents. [FY19 Turnover] SIA (80%), Budget Aviation (10.5%), SilkAir (6.2%), SIAEC (3.1%), others (0.2%).

Insight: May-19, FY19 revenue edged up 3.3% to $16.3b. Pass... Read More

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