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Investors’ Corner
Investors' Corner | 16 July 2010
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By: Choo Hao Xiang
Articles (151) Profile

China Fishery Group
Price – $2.00
Target – $2.12

China Fishery Group (CFG) has recently announced the placement of its new shares and warrants to Carlyle Group (Carlyle). The proceeds from the placement would be utilized for investment purposes such as 1) upgrading of CFG’s supertrawlers to improve operating efficiencies; 2) acquiring more Vessel Operating Agreements in the North Pacific; 3) acquiring Peruvian Anchovy quota. CFG attributed the recent weakness in fishmeal prices to a strong surge in fishmeal prices earlier this year, and has now corrected to a more sustainable level, which CFG believes will stabilize at US$1,400-1,500/mt over the long term. We have lowered our South Pacific Jack Mackerel assumption, as the fishing period started slightly later than was initially expected. While we believe there could be potential upside to FY11F earnings assuming new funds are deployed for acquisitions, we would prefer to revisit it when it materializes. Downgrade to HOLD. – DBS Vickers (12 Jul)

Ezra Holdings
Price – $1.81
Target – $3.05

Ezra Holdings (Ezra) reported better than expected 3Q10 results, with net profit of US$25.7m (inspite of net loss at EOC), up 37% YoY. 9M10 net profit was up 26% YoY due to a one-off gain on sale of tanker and US$3m gain on EOC dilution (relating to acquisition of London Marine Group). These were offset by lower earnings from associate company, EOC due to lower utilization of Lewek Champion and maintenance of FPSO. Ezra expects a slight delay in delivery of 2 subsea assets in Sep/Oct-10. The third subsea asset is targeted for delivery in Mar-11. These 3 assets remain the key driver over the next 2-3 years and any further delay would adversely impact our earnings estimates. With the recent proposed merger of Subsea 7 – Acergy, which would make it 3rd largest Subsea player globally, Ezra sees more consolidation in the sector. We believe Ezra could look to grow its business inorganically. OVERWEIGHT. – JPMorgan (12 Jul)

Sembcorp Marine
Price – $3.96
Target – $5.20

Sembcorp Marine (SMM) has signed a contract to sell the CJ-70 harsh environment jack-up drilling rig, previously Petropod-owned, under construction to Seadrill. The rig will operate in the North Sea, a quality-stringent area where high standards are applied. SMM’s successful delivery will further lift its reputation for quality/safety. As SMM had terminated its previous contract with Petroprod, no margins have been recognised so far. The resumption of profits on this contract will commence from 3Q10, suggesting most of the income will be recognised in the next 3 quarters till 1Q11. SMM has collected about US$220m from previous owner Petroprod. Together with the new US$356m contract with Seadrill, we think revenue from this CJ-70 rig could reach about US$576m. BUY. – Deutsche Bank (12 Jul)

Singapore Press Holdings
Price – $3.93
Target – $4.50

Singapore Press Holdings (SPH) announced impressive 3Q10 results, with net profit of $164m on the back of stronger contributions from its Sky@Eleven property project. We view SPH’s core business as being in a sweet spot, with strong advertising revenue growth and relatively low newsprint cost. Display ads for 3Q10 were up 31.3% YoY while classified by 23.6%. This led to a 28.3% rise in total advertising revenue for 3Q10. We expect this trend to continue in the coming quarters, supported by areas such as retail, tourism and job market. Since SPH typically books 6 months in advance, we expect the increase in newsprint costs in the next 6 months to be significantly below the current spot rate at around US$650 per tonne. SPH is trading at a 8% discount to its 10 year mean. We believe at this stage of its earnings cycle it should command a premium. Maintain BUY. – UBS Investment (13 Jul)

Haoxiang manages and oversees the portfolio of stocks in the consumer goods and hospitality sectors at Shares Investment.

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China Fishery Group  -- -- --   
Business: An integrated industrial fishing co managing fishing vessels, sells marine catch & produces fish products. [FY14 Turnover] Peruvian fishmeal (68.9%), contract supply (24.4%), china fishery fleet (6.7%).

Insight: Oct-15, Co announced that in line with its assessm... Read More
Ezra Hldgs  -- -- --   
Business: Co is a provider of integrated offshore solutions to the oil & gas industry. [FY16 Turnover] Marine Services (68.9%), offshore support and production services (25.7%), subsea services (5.4%).

Insight: Oct-17, The US Bankruptcy Court approved the appli... Read More
Sembcorp Marine  1.520 -0.030 -1.94%   
Business: Co is a leading global marine & offshore engineering group. [FY18 Turnover] rigs & floaters, repairs & upgrades, offshore platforms (98.8%), ship chartering (1%), others activities (0.2%).

Insight: May-19, 1Q19 revenue fell 31.3% to $810.6m due to ... Read More
Singapore Press Hldgs  2.350 -0.03 -1.26%   
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


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