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Investors’ Corner
Investors' Corner | 13 November 2009
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By: Xavier Lim
Articles (51) Profile

Pan Hong Ppty Group
Price – $0.545
Target – $0.65

Pan Hong Property Group’s (PANH) 2QFY10 performance was within our expectations and we expect the handover of three projects (representing Rmb724.5m and pre-sold GFA of 119k sqm YTD) in 3Q – 4QFY10 to account for a significant proportion of our full year projections. Although management expects a near term correction in China’s property market, we believe PANH is well-sheltered, due to: (1) unbilled sales of Rmb883.6m, (2) net cash position, as well as (3) management’s proven track record and prudent capital management. Unsold landbank of ~ 2.8m sqm across three growing lower tier provinces remains PANH’s key investment highlight. Management continues to assess the usage for ~ 72k sqm of commercial assets, which we see greater value in retaining as investment properties to decrease its lumpy income stream. Maintain BUY.
– DMG & Partners (10 Nov)

Rickmers Maritime
Price – $0.365
Target – $0.16

Rickmers Maritime (RMT) posted 3Q revenue, up 43.4% YoY driven by vessel acquisitions and up 1.4% QoQ. RMT will distribute US$0.006 per unit, down 73% YoY but flat QoQ. RMT said that talks with key stakeholders including lenders and its sponsor continue to be “dragged out”. RMT said all future deliveries will be warehoused by the sponsor until discussions conclude – diffusing what may essentially be a default situation (in our view). We note that the container market is still languishing and counterparty health continues to be a key concern. Looking to the REIT space, RMT could conceivably go the MI-REIT route by simultaneously restructuring its debt and raising equity through a private placement and a rights issue. This is not a fail-safe alternative, though, as RMT’s gearing is higher; its contracted order book is larger; and the industry it operates in is sicklier. Maintain SELL.
– OCBC Investment (10 Nov)

Straits Asia Resources
Price – $1.93
Target – $2.51

We are bullish on Straits Asia Resources (SAR) on account of strong earnings growth expected from rising production and firm prices. Valuations are undemanding vs our DCF-derived target price of $2.51, with a forecast dividend yield of 5.8% for FY10, implying potential upside of 30%. We forecast an earnings CAGR of 31% for FY08-12, backed by a steady production ramp to 19.5Mt by 2013 from 8.6Mt in FY08, coupled with firmer coal prices. Coal prices have been rising together with a global economic recovery, with forward prices rising by US$10-11/tonne to US$104/tonne for FY13-14 deliveries in the past three months. Coal demand is forecast to rebound in 2010 on the back of demand strength in China, India and South Korea. We see potential catalysts in higher reserves discoveries, higher output, sustained strength in the global economic recovery. OUTPERFORM.
– CIMB-GK (10 Nov)

Midas Hldgs
Price – $0.85
Target – $1.10

9M09 earnings up 13% yoy to $27.4m, even as revenue dipped 4% to $104m. While revenue from the PE Pipes and Agency businesses declined, Midas’ aluminium extrusion business continued to grow and drive earnings. Gross profit as at 9M09 grew 17%, due to higher share of contribution from the aluminium extrusion business. Midas spent $46.4m on capex in 3Q09 ($72.8m as at 9M09) as it continues to build more production lines to meet demand. Meanwhile, the balance sheet remains healthy with net cash of $40.3m whilst operating cash flow was strong at $9m for 3Q09 ($31.4m for 9M09). With strong order books of c. Rmb1.3b for the aluminum extrusion business and over Rmb5.5b for associate Nanjing Puzhen (NPRT), the Group’s earnings in 2010 is almost fully secured. Meanwhile, both businesses continue to bid for more rail-related projects, riding on China’s growing investments in both inter-city and intra-city rail infrastructure. Maintain BUY.
– DBS Vickers (11 Nov)

Armed with an arsenal of investment knowledge, Xavier is the Senior Research Editor at Shares Investment.

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Pan Hong Hldgs Group  -- -- --   
Business: Co is property developer of quality residential and commercial properties in China. [FY18 Turnover] Residential (92.3%), commercial & others (7.7%).

Insight: Feb-19, 9M19 revenue declined 96.8% to Rmb12.4m ma... Read More
Midas Hldgs  -- -- --   
Business: Manufacturer of aluminium alloy extrusion products for China's rail transportation sector. [FY16 Turnover] Aluminium alloy (99.3%), polyethylene pipe (0.7%).

Insight: Jan-18, Co announced that its JV company, CRRC Nan... Read More

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