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Investors’ Corner
Investors' Corner | 07 May 2010
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By: Jasmine Toh
Articles (6) Profile

Indofood Agri Resources
Price – $2.40 Target – $2.83

Indofood Agri Resources (IFAR) reported an increase in 1Q10 revenue by 5.8% due to higher average selling price of palm products and revenue contribution by rubber. IFAR’s PAT grew 35.5% in 1Q10 due to higher profit from operations, with lower interest expense and income tax expense. We have increased our earnings estimates for IFAR due to improving global outlook and the steady upward trend of Crude Palm Oil (CPO) prices. The adverse effect of El Nino on production comes after a time lag, and the effect is likely to linger for some time, reducing CPO production at least till the third quarters of 2010. Indonesian plantations are not as affected by El Nino than Malaysian plantations. This spells good news to Singapore plantation stocks as their plantations are in Indonesia. Maintain BUY. – Phillip Securities (03 May)

Raffles Education Corp
Price – $0.37 Target – $0.56

Private equity firm, AIF Capital Asia (AIF) has signed a non-binding term sheet with Raffles Education Corp (REC) to acquire a 10% investment in Oriental University City (OUC) for Rmb350m to be finalized by 30 June 2010. This transaction follows the February Rmb300m divestment of a 10% stake in OUC to Khazanah, the investment arm of the Government of Malaysia. We believe this further validates the long-term growth potential of OUC and allows REC to monetise its investment ahead of a potential listing by August 2013. The sale price implies OUC could now be worth up to Rmb3.5b, a significant premium to REC’s Rmb2b acquisition price. The proceeds will be used to embark on new opportunities and pare debt. REC has S$75m net cash. With a strong cash position, we would not be surprised if management resumes its dividend payout in FY10. Unchanged at BUY. – UBS Investment (03 May)

Ascott Residence Trust
Price – $1.20 Target – $1.35

1Q10 results were in line with our expectations. Ascott Residence Trust (ART) remained stable with gross profits improving 1.4%. We believe upcoming catalysts also include potential apartment rate increases for Singapore in 2H10. ART offers a prospective return of 19.4% from potential price upside of 12.5% and forward dividend yields of 6.9%. ART is one of the few REITs trading below book value. Strong growth from Australia, China and the Philippines was diluted by weakness in Indonesia, Japan and Singapore. Singapore market is expected to grow strongly this year, mainly due to improved occupancy. Other than the one-off property-tax reassessment, ART’s Singapore assets are also being refurbished, which took out 15% from its inventory. Completion is anticipated at end-2Q10. We expect strong apartment rates and an occupancy recovery in 3Q. Upgrade to OUTPERFORM. – CIMB (03 May)

Price – $2.28 Target – $2.00

4Q09 net profit was down 41% way beyond expectations. The dismal performance came from higher staff costs, repair & maintenance and depreciation, while topline grew by only 3.7%. SMRT’s share price has done well, up 19.4% and outperforming the STI by 15.8%. This was on the back of high market expectations of robust ridership growth and the opening of Circle Line Stage 1 & 2. We cut our FY11F forecasts by 6%, on higher staff and repair and maintenance costs. This will be partially offset by higher train ridership, with the opening of the Circle Line. The recent strength in share price has exceeded our expectations. While the long term prospects for rail in Singapore is positive, we believe the market has been overly euphoric over the opening of the Circle Line Stages 1& 2. For investors who would still like exposure to land transport counters, we recommend a switch to ComfortDelGro, trading at c.15x prospective PE, a 25% discount from SMRT. Downgrade to FULLY VALUED. – DBS Group (03 May)

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
Raffles Education Corp  -- -- --   
Business: Co is the largest private education group in Asia-Pacific. [FY18 Turnover] Education (81.6%), education facilities rental service (13.6%), real estate investment (4.8%).

Insight: Feb-19, 1H19 revenue fell 0.3% to $48.7m due to ch... Read More
Ascott Residence Trust  1.310 +0.010 +0.77%   
Business: REIT invests in income-producing real estate assets which are used or predominantly used, as serviced residences, rental housing properties and other hospitality assets.

Insight: Apr-19, 1Q19 revenue increased 3% due to stronger ... Read More

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