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Investors’ Corner
Investors' Corner | 09 April 2010
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By: Jasmine Toh
Articles (6) Profile

Singapore Press Hldgs
Price – $3.82 Target – $4.67
We maintain our view that SPH is a key beneficiary of a pick-up in private consumption in Singapore. However, it continues to trade at a substantial 27% P/E discount to the market, versus a historical 10-year average premium of 25%. Even excluding non-recurring contributions from the company’s residential property development project Sky@eleven, the P/E premium for SPH is now only 10%, versus the historical average of 31%. Estimated total classified volumes jumped 18% YoY in March – a big improvement from the estimated 7% decline in 2Q classified volumes. The strong showing is attributable to a 71% YoY surge in job ad volumes. The strong job ad demand is in line with the healthy pick-up in the Singapore economy. Further, there is a sharp turnaround in non-job classified ad volumes – from an estimated -17% YoY for 2Q10E to +1% in March. Maintain OUTPERFORM. – Credit Suisse (05 Apr)

United Engineers
Price – $2.51 Target – $3.34
UE has acquired an industrial property located at Ang Mo Kio from Motorola Electronics Pte Ltd for S$25m. This is an extremely favorable rate as UE stand to book over 12% net yield from this acquisition through 3rd-party tenants. This compares well with current industry cap rates of 7%. The acquisition signals management’s intention to enhance its status as a premier commercial property proxy in Singapore. The group plans to centralize most of its business at UE BizHub Central by the end of the year. Management plans to leverage its build-to-suit capabilities by further modernizing and expanding its latest acquisition to 500,000sf GFA. UE will be financing this acquisition with internal resources. We estimate its net gearing will remain range-bound after this acquisition, which would put it in good financial stead for a potential stake in the Specialist Centre & Hotel Phoenix redevelopment project. Maintain OUTPERFORM. – CIMB (06 Apr)

Indofood Agri Resources
Price – $2.37 Target – $3.06
In 3Q08 Indofood Agri (IA) announced it was investing S$56m for a 60% interest in a sugarcane plantation in South Sumatra. The investment required rehabilitation of the plantation and construction of a mill and refinery by early 3Q10. Although sugar prices are off the highs since early 2010, profitability is still good. Our earnings forecast currently does not include any contribution from the new business. However, the completion of the sugar refinery is less than six months away and we reckon there could be an earnings surprise. Based on the current price of Rp7,000/kg for refined sugar, we estimate the unit could contribute Rp232b (US$36m) or 10% to the company’s net profit in 2011. We reckon IA has the highest potential for volume growth over the next 4-5 years because its immature land is 46% of its mature land as at December 2009.
Maintain BUY. – UBS Investment (06 Apr)

Price – $1.35 Target – $1.60
New orders this year is expected to jump 4-folds to S$12bn, back to 2008 level. COSCO Corp has seen strong enquiry levels for offshore projects and is currently in talks for a few new turnkey contracts. We believe the award of COSCO’s first turnkey project – Sevan Driller II worth US$500m serves as a harbinger for offshore contract flow. Taking into account the potential US$480m value-add contract for MPF Corp’s project, COSCO could bag US$1.5b new orders this year with simply one more turnkey project. We have revised up FY10 and FY11 net profit forecasts by 7% and 32% respectively on higher order wins. We have also rolled over our valuation to FY11, which better reflects the earnings recovery trend of COSCO. Key risk in our call is a delay in the recovery of its shipbuilding earnings due to execution issues. Upgrade to BUY. – DBS Group (07 Apr)

Singapore Press Hldgs  2.110 +0.03 +1.44%   
Business: Co is S'pore's main newspaper & magazines publisher that also has investment in properties. [FY18 Turnover] Media (66.7%), property (24.7%), others (8.6%).

Insight: Apr-19, 1H19 operating revenue fell 3% to $477.6m ... Read More
United Engineers  2.560 -0.01 -0.39%   
Business: [FY17 Turnover] Engineering & distribution (25%), property development (27.1%), property rental & services (24.3%), manufacturing (15.8%), corporate services & others (7.8%).

Insight: May-18, 1Q18 revenue fell marginally by 0.8% to $1... Read More
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
COSCO Shipping Int'l (S)  0.285 -0.005 -1.72%   
Business: Engaged in shipping and other logistics services. [FY18 Turnover] Logistics (69.7%), property management (11.9%), Shipping (9.5%), ship repair and marine related activities (8.9%).

Insight: Mar-19, FY18 revenue jumped 340% to $163.7m and gr... Read More

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