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Investors’ Corner
Investors' Corner | 30 October 2009
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By: Lai Wyai Kay
Articles (53) Profile

First Ship Lease Trust
Price – $0.61
Target – $0.70

First Ship Lease Trust (FSLT) delivered another quarter of steady results, returning US$0.015 DPU to investors. Of the US$9.6m cash remaining, US$8m will go towards quarterly prepayment of loans, reducing outstanding loans to US$493m; gearing now stands at 1.3x. The manager has reiterated that all advance lease payments have been prompt until October 2009 and no request for renegotiation has been received. Hence, risks at FSLT are well managed. While DPU guidance for 4Q09 has been maintained at US$0.015, we project a conservative US$0.014 DPU per quarter in FY10, given the higher interest costs to be incurred hereon. FSLT is still trading at 13% FY10 dividend yield, more secure and more attractive compared to its peers. Further, the placement proceeds of US$28m raised during 3Q09 will provide management with a lever to pursue DPU-accretive growth. Maintain BUY.
– DBS Vickers (26 Oct)

Price – $4.43
Target – $5.65

CapitaLand’s (CL) 3Q09 core net profit beat expectations, with development projects in China and Singapore pushing revenue up by 75% y-o-y. Singapore revenue improved on substantial recognition for The Seafront and Latitude. CL expects forward revenue in Singapore to be strong, underpinned by presales. Over 70% of the 360 units at The Interlace has been sold. Char Yong Gardens should also be launch-ready by 4Q09. China sales were robust with over 440 units sold in 3Q09. Revenue from retail malls was also up 5% y-o-y. Improvements in capital management brought down its net gearing from 0.43x in 2Q09 to 0.34x. Operating cash flow turned positive to $450m. No asset impairments were booked in 3Q09. We remain excited about the prospects of a CapitaMalls Asia listing and its potential positive impact on CL. Maintain OUTPERFORM.
– CIMB-GK (27 Oct)

Noble Group
Price – $2.75
Target – $3.14

Noble remains our preferred pick within the commodities sector by virtue of its diverse exposure to hard and soft commodities, coupled with a strong balance sheet and proven execution. Distressed assets have surfaced along with the economic recession, presenting Noble with opportunities to expedite its transformation from an asset-light business model towards one which is more asset intensive. The group aims to double its net profit to US$1b over the next three to five years. We expect part of this growth to be driven inorganically. Noble has recently strengthened its balance sheet via an equity placement and a separate bond issue, raising net proceeds of over US$1.4b. The group will release its 3Q09 results on 11 Nov. We will be looking out for volume trends as well as signs of stabilisation in profit margins, especially within the metals and energy segments. Maintain BUY.
– OCBC Investment (27 Oct)

Singapore Airport
Terminal Services
Price – $2.50
Target – $3.39

We are raising our earnings forecast for FY10 slightly to $174.4m mainly due to lower-than-expected potential restructuring charges, $4.5m job credit extension, a favourable reversal of exchange rate impact and strong recovery of regional associates. The July to September quarter is conventionally the worst performing quarter for SFI. We however estimate a strong upturn in 3Q10. We have yet to factor in the profitability impact of new product launches and increased export sales to France, Belgium and Holland, as well as earnings impact from future market expansion in Germany and Austria. We raised our DCF-based target price from $3.24 on lower-than-estimated capex requirement and good FCF generation. With its enlarged free-float from 19% to 56%, recovering economies and regional air traffic, we believe the risk-reward profile to be highly attractive. Unchanged at BUY.
– BNP Paribas (27 Oct)

First Ship Lease Trust  -- -- --   
Business: Singapore-based business trust which owns a fleet of vessels across major shipping sub-sectors.

Insight: Feb-19, FY18 revenue fell 17.7% due to a reduced f... Read More
CapitaLand  3.510 -0.03 -0.85%   
Business: Co develops, owns, and manages real estate properties. [FY18 Geographical] China (41.2%), S'pore (38.5%), Europe & others (18.6%), Vietnam & Others (1.7%).

Insight: Apr-19, 1Q19 revenue fell 23.8% while net profit d... Read More
SATS  4.790 -- --   
Business: Asia's leading provider of gateway services and food solutions. [FY19 Turnover] Food solutions (54.1%), gateway svcs (45.8%), others (0.1%).

Insight: May-19, FY19 revenue rose 6% to $1.8b driven by hi... Read More

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