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Investors’ Corner
Investors' Corner | 12 March 2010
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By: Jasmine Toh
Articles (6) Profile

Tiger Airways Hldgs
Price – $1.48 Target – $1.77
Being an Asian replica of the low-cost business model established by Ryanair, we think investors will value Tiger on a similar basis. 5 reasons for our Buy rating: 1) Disciplined execution of low-cost strategy by focusing on short-sector flights for sustainable route profitability. 2) The four major shareholders provide checks and balances to ensure Tiger adhere to its low-cost business model. 3) Exceptional growth opportunities – low market penetration translates to a 15-20% increase in passengers for low-cost airlines for the next five years. 4) Ancillary revenue growth: accounts for about 20% of total revenues, or S$21/psgr, and targeted to grow to 25% of total revenues. 5) Highest-quality low-cost airline franchise: Prudent and conservative accounting adopted to recognise revenues and profit. Initiate with OVERWEIGHT. – Morgan Stanley (4 Mar)

Straits Asia Resources
Price – $1.97 Target – $2.50
We raised our stripping ratio for Sebuku mine from 4.5 to 5 for 2011 and lowered vol estimates by 7% to 14mt, in line with company’s new guidance. Sebuku plans to produce 0.6mt in 1H10 and 1.2-1.4mt in 2H10 and will do a lot more pre-stripping in 1H before normalizing in 2H. This should result in higher costs. 1H10 will likely be weaker than 2H10 and we are lowering our EBITDA estimates by 4% in 2010 and 15% in 2011. We still expect SAR to get the forestry permit in 1H10 and the replacement of Richard Ong as CEO should not disrupt the application. Negotiations to retrieve US$25m insurance claim for Jembayan jetty failure is ongoing. Lastly, company’s plan to upgrade Jembayan reserve is still intact. SAR has corrected 27% from its recent high and is trading at a 45% discount to its historical peak of 24x, implying a coal price of US$70/t, vs the current US$90/t. Reiterate BUY. – Merrill Lynch (5 Mar)

CapitaMalls Asia
Price – $2.29 Target – $2.53
CMA has agreed to acquire an integrated development comprising retail, residential and office in Chengdu for $114m from 45% owned CapitaRetail China Development Fund II. Including the land cost of Rmb305m, construction and fitting out costs, CMA’s estimated total expenditure is $368m. This is the second acquisition by CMA post-IPO after the purchase of Meili Mall last month. This development, is located in Chengdu’s Gao Xin district, at the core of the upcoming South Business District, within 50 metres of a metro train station which is expected to be operational by 3Q10. The retail component, Tianfu Mall, is targeted for completion by end-2013. It will serve a catchment population of about 400,000 people within a 5km radius. This acquisition brings CMA closer to its 40% target asset allocation in China and gives it full control over a strategically located asset at an attractive valuation. BUY. – Deutsche Bank (8 Mar)

Healthway Medical Corp
Price – $0.165 Target – $0.26
4Q09 net profit of $3.1m (+35% YoY) was in line with expectations, largely attributed to contributions from its acquisition of several practices in mid-08, organic growth at its medical
centres and the expansion of its clinic network during the year. It recently placed out 108m shares and secured a US$15m loan from IFC. At the same time, it also placed out 85.9m shares to major shareholders, allowing it to raise ~$45m; we assume the bulk of which would be used to fund its China expansion plans. With a healthy balance sheet, Healthway’s net gearing stands at 0.2x at 4Q09. In order to fund expansion plans, we do not rule out further fund raising activity. Healthway plans to open another 6 medical centres in Shanghai in FY10. We estimate that Healthway can possibly open at least another 30 medical centres over the next five years. This would fuel earnings growth going forward. Maintain BUY. – DMG & Partners (8 Mar)

Healthway Medical Corp  0.025 +0.003 +13.64%   
Business: Network of private medical centers & clinics, providing primary healthcare, dental & specialist services in Singapore.

Insight: May-19, 1Q19 revenue slid 5.4% with decreased reve... Read More

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