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Investors’ Corner
Investors' Corner | 21 May 2010
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By: Jasmine Toh
Articles (6) Profile

Tiger Airways Hldgs
Price – $2.40 Target – $2.83

Tiger reported a 4Q09 net income of $22m, below our expectation of $35m, mainly due to recognizing only half of the Australian deferred tax asset. Pretax profit of $13m was in line with our expectations. The Australian operation turned in a breakeven result for the full year, below our operating profit forecast of A$8m. Stripping out the fuel hedging loss, we estimate the Australian operation to turn in an operating profit of $9.5m. We recommend accumulating Tiger shares should the stock correct on a market pull-back, or at $1.70 level. Since hitting the low on March 3, the share price has rallied by 22%, outperforming the local market by 19%, and we think Tiger shares might find it difficult to replicate its relative outperformance for the rest of the year. EQUALWEIGHT. – Morgan Stanley (18 May)

Noble Group
Price – $1.83 Target – $2.46

Noble’s subsidiary Noble Petro announced the acquisition of refined fuel blending, distribution, trading and marketing assets in USA, Northville Product Services. This would increase Noble Petro’s storage capacity for its ethanol, gasoline & distillates businesses, from the existing 2.3m MT to 6m MT. We believe this highlights Noble’s increased focus in building a scalable oil & gas trading business, which may become a key earnings driver. We believe catalysts such as a strong balance sheet, CIC partnership and assets coming online, ensure Noble is in a sweet spot for a multiyear restructuring and re-rating. Macro headwinds have led to underperformance YTD (down 11%), which provides a good entry point. It is trading at 14.1x FY10F P/E which looks attractive considering Noble is now much less exposed to volatile commodity businesses than in 2007/08. Reaffirm BUY. – Nomura (18 May)

ComfortDelGro Corp
Price – $1.50 Target – $1.89

Overall a good set of results for ComfortDelGro (CD) for 1QFY10. While net profit was up a

modest 3% YoY, largely due to deferred tax write-back of $5.2m in 1QFY09. At operating profit level, CD grew 11% YoY which is within expectations. With operations in Britain accounting for 10% of operating profit, China 12% and Australia 15%, CD benefited from a $2m forex translation effect. Better performances in Rail and Taxi segments offset poor bus operations. 75% owned SBS Transit saw a mere 1% YoY growth in ridership in 1Q10 while April 2009’s adjustment cut average fare by 5% YoY. Rail ridership on the other hand, grew 12% to 36 million, while taxi revenue grew 8% YoY on higher operating fleet. Despite higher oil-prices at 80% higher in 1Q10 compared to 1Q09, CD’s oil-related cost items were well-contained as Management had a good hedged position. Maintain BUY. – CIMB (18 May)

Price – $3.60 Target – $4.34

We think the recent selldown in CapitaLand (CapLand) is overdone and the current price presents a buying opportunity. Stock is trading at just 1.1X P/BV. Although we reduce our price assumptions for China residential property prices following recent tightening measures, the decline was partially offset by higher FV of CapitaCommercial Trust following our less negative view on office. As the recent rise in prices have been steeper than expected, on a net basis, we cut our price assumptions for the recent acquired sites by an average of 17% and marginally for the landbank acquired earlier. Even after recent acquisition of Orient Overseas Developments Limited, CapLand still has a healthy net debt/equity ratio of 0.27x and a cash balance of $5.7b. The strong financial position allows CapLand to capitalize on any opportunities that might arise on the back of these tightening measures. BUY. – CitiGroup (18 May)

ComfortDelGro Corp  2.650 -0.02 -0.75%   
Business: [FY18 Turnover] Public transport services (71.2%), taxi (19.1%), others (9.7%).

Insight: May-19, 1Q19 revenue rose 7.8% to $947.3m, underpi... Read More
CapitaLand  3.570 +0.03 +0.85%   
Business: Co develops, owns, and manages real estate properties. [FY18 Geographical] China (41.2%), S'pore (38.5%), Europe & others (18.6%), Vietnam & Others (1.7%).

Insight: Apr-19, 1Q19 revenue fell 23.8% while net profit d... Read More

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