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Investors’ Corner
Investors' Corner | 26 November 2009
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By: Lai Wyai Kay
Articles (53) Profile

Indofood Agri Resources
Price – $1.81
Target – $2.30

Bulk of Indofood Agri Resources’ (IFAR) earnings is derived from production and sales of CPO. Hence, we view IFAR as an excellent proxy to CPO price. We estimate a 10% change in CPO price would translate into a ±17% change in EPS. We expect CPO price to rebound to an average of US$788 per tonne in 1QCY10 from US$700 currently, driven by supply constraint as CPO enters the low production cycle; average CPO price to average US$742 per tonne in CY10, a 14% increase from an estimated US$650 per tonne average in CY09.

With rising crops production supported by favourable palm trees age profile and aggressive new planting, earnings growth could outperform its peers. While our target is close to the upper end of the historical PER trading range, we believe this is justified given that IFAR is a high beta plantation stock and likely to be a key beneficiary of a rising CPO price. Initiate with BUY.
– TA Securities (20 Nov)

Pacific Andes Resources Devt
Price – $0.255
Target – $0.31

Pacific Andes Resources Development’s latest addition, China Fishery Group’s (CFG) key flagship factory vessel, the Lafayette, can freeze up to 1,500 tonnes of fish per day and will be deployed to the South Pacific before year’s end. This brings CFG’s total fleet tonnage there to 85,000 tons. This could potentially mean a 20- 25% market share of the Chilean Jack Mackerel market in the future as activities gear up before the implementation of the quota system, providing substantial organic growth for the group. While demand for Chilean Jack Mackerel is mainly in the West African countries, increasing human consumption will enhance the value of this fish, which has grown from less than US$600/ ton in 2001 to about US$1000/ ton currently. Despite changes to its financial period, our forecasts remain fairly unchanged pending the release of its results next week. Maintain BUY.
– OCBC Investment (20 Nov)

DBS Group Hldgs
Price – $14.86
Target – $18.30

Given its strong banking franchise and liquid balance sheet, DBS stands to gain the most from a rising interest rate environment and a rebound in the capital market. The appointment of Piyush Gupta as the CEO is a key positive. Given Gupta’s solid experience in the commercial banking space, it could help rejuvenate DBS’ banking brand name. One near-term catalyst for DBS is more key-management appointments that could bring much-needed new “blood” onboard to rejuvenate this franchise. The second catalyst is rising interest rates. While we do not expect a sharp interest-rate up-cycle to unfold, given the lack of inflationary pressures, we expect DBS’ share price to react positively, as the market tends to look ahead and the anticipation of further rate hikes could propel the share price higher.
Between DBS and UOB, we prefer DBS given its stronger earnings growth prospects. Upgrade to BUY.
– BNP Paribas (23 Nov)

SIA Engineering
Price – $2.93
Target – $3.57

Recent operating data released by SIA for Oct 09 show unabated passenger and cargo traffic growth and high load factors. The International Air Transport Association is also reporting a turnaround in revenue, passenger numbers and premium seat sales. Load factors for passenger and cargo have returned to pre-crisis levels, especially for Asia-Pacific carriers. We expect an earnings acceleration for SIA Engineering (SIE) on the back of these improvements. SIE’s 2Q10 results beat our expectations because of stronger-than-expected line maintenance, following record-high flights handled at Changi. We believe that strength will persist with airlines reinstating flights and adding capacity as demand turns around. In addition, growing capacity by low cost carriers and the opening of two integrated resorts in Singapore are expected to support strong traffic intensity in Changi. Upgrade to OUTPERFORM.
– CIMB-GK (23 Nov)

Indofood Agri Resources  0.325 -- --   
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
Pacific Andes Resources Devt  -- -- --   
Business: Engages in industrial fishing & supply chain mgt of frozen seafood pdts. [FY14 Turnover] Fishery and fish supply (60.6%), frozen fish SCM (39.4%).

Insight: Mar-15, Co's 1Q15 revenue reported a 25.3% drop, w... Read More
DBS Group Hldgs  25.300 -0.17 -0.67%   
Business: [FY18 Total Income] Institutional banking (43.7%), consumer banking/wealth management (42.9%), treasury markets and others (13.4%).

Insight: Apr-19, 1Q19 net profit rose 9% to a record $1.7b.... Read More
SIA Engineering Co  2.530 -0.02 -0.78%   
Business: A leading aircraft maintenance, repair and overhaul (MRO) company providing total maintenance solutions to a client base of international airlines. [FY18 Turnover] Airframe and Line Maintenance (97.5%), Engine and Component (2.5%).

Insight: May-19, FY19 revenue was 6.8% lower at $1b largely... Read More

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