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Investors’ Corner
Investors' Corner | 11 December 2009
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By: Lai Wyai Kay
Articles (53) Profile

CSE Global
Price – $0.80
Target – $1.18

Following a brief earnings decline this year, CSE Global (CSE) should return to its trademark growth next year. Our expectations stem from a strong orderbook and the growth potential in Middle East and Australia. Management shared that many Middle Eastern countries are going ahead with constructing their own refineries for strategic reasons despite lower margins. Australia would also see more activity in the LNG and mining sectors. Meanwhile, another growth driver should be its newly acquired thermal engineering business, whose revenue tripled to $20m in just one year. With $400m worth of order wins in 9M09, CSE will secure an estimated $520m for FY09 compared with $425m in FY08. With most of the new orders coming in 2H09, they would be carried forward to FY10F. With a potential 21% y-o-y revenue growth in FY10F, we expect 18% earnings growth. BUY.
– DBS Vickers (7 Dec)

Price – $3.15
Target – $4.10

The award of the Salalah project in Oman, and various water and wastewater treatment projects in China signal the thawing of investment freeze in the water sector. Hyflux’s flexible business model allows it to undertake Engineering, Procurement and Construction (EPC) or equipment supply for projects where it is not participating in ownership or management. The Salalah EPC contract itself meets 20% of our 2010 EPC new wins forecast for Hyflux. With its established track record in reverse osmosis desalination, Hyflux has the experience, opportunity and momentum to gain share in the US$70b desalination market. Underinvestment in water globally has exacerbated the need for new infrastructure in some of the most populous regions. Given the demand for water supply and treatment solutions, as a pure play with growing scale, Hyflux is one of the best exposures to this sector. Maintain OUTPERFORM.
– Credit Suisse (7 Dec)

Neptune Orient Lines
Price – $1.53
Target – $1.50

Neptune Orient Line’s Period 11 volumes and average freight rates declined marginally from Period 10 as the peak season comes to a close but were marginally better-than-expected. In addition, we hear that shipping companies with stronger balance sheets and lower risk of bankruptcy are seeing stronger volumes as customers are diversifying cargo from shipping companies facing financial issues. We think NOL could be a key beneficiary here. NOL’s current valuation of 1.1x 2010E P/BV, above its historical average, is not particularly compelling. We expect weak freight rates over the next three months to weigh on near-term stock performance. Conversely, potential upside catalysts are stronger 1Q10 volumes in the seasonal lull due to restocking and Transpacific rate hikes from mid-2010, as shipping companies become more rational in freight rate pricing. EQUALWEIGHT.
– Morgan Stanley (7 Dec)

Yongnam Hldgs
Price – $0.25
Target – $0.47

Yongnam Hldgs (YNH) enjoyed a record order book this year and FY09 net profit is expected to reach new heights. We believe FY10 will be equally exciting, if not better. YNH is bidding for more than $1b worth of contracts. We highlight five major projects which YNH could win, including Singapore Sports Hub, Downtown Line, Jurong rock cavern and Oman Airport Terminal Building. If YNH meets our estimates, its order book at end-2010 could breach $600m. Accordingly, our target price has been upgraded, based on 10x CY11 P/E but at the lower end of its mid-cycle multiples. We believe that YNH will survive the competition as this specialist contractor is a leader in its field, with an unrivalled capacity and track record. We expect a slight dip to gross margins, mitigated by a strong competitive position and a more favourable project mix. Maintain OUTPERFORM.
– CIMB-GK (8 Dec)

CSE Global  0.475 +0.015 +3.26%   
Business: A global technologies company offering cost-effective, totally integrated solutions to industries various sectors. [FY16 Geographical] The Americas (63.4%), Asia-Pacific (34.3%), Europe/Middle East/Africa (2.3%).

Insight: Feb-19, FY18 revenue increased by a moderate 4%, m... Read More
Hyflux  -- -- --   
Business: Provides integrated water management & environmental solutions. [FY17 Turnover] Municipal (82.5%), industrial (16%), others (1.5%).

Insight: Mar-19, 9M18 revenue sank 75% due to lower enginee... Read More

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