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Investors’ Corner
Investors' Corner | 27 August 2010
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By: Choo Hao Xiang
Articles (151) Profile

Olam Int’l
Price – $2.49
Target – $3.30

We raised Olam’s FY10F–11F earnings by 6.2–4.6%, considering the ramp up contributions from acquisitions completed since FY09 and turnaround in industrial raw materials in 9M10. In an environment of volatile commodity prices, Olam’s core origination and value-add processing businesses have remained resilient, due in part to the group’s ability to manage risk, as well as the defensive quality of most of Olam’s commodities. Olam is due to announce, together with 4Q10 results, a new performance metrics for the group’s various businesses, which we believe will improve visibility on the segments. We expect the group’s earnings growth to accelerate next year, based on US$788.2m worth of investments this year. Further inroads are anticipated over the next 2 years given the group’s objective to increase net margin from 2% to 4% as well as to triple shareholders’ intrinsic value over the next 6 years. BUY. – DBS Vickers (24 Aug)

Wing Tai Hldgs
Price – $1.69
Target – $1.93

Wing Tai’s FY10 core earnings, excluding revaluation, were 14% below our estimate mainly due to weaker-than-expected prime segment sales and slower profit recognition. Wing Tai plans to launch luxury projects at the Anderson and Ardmore sites, as well as the remaining units of Belle Vue and Helios in FY11. High-end sales are expected to take a near-term breather. In the longer term, we think that Wing Tai’s luxury projects are differentiated and it is well positioned to ride the uptick when it returns. The firm remains largely selective on Government Land Sales, preferring to stay clear of the mass-mid upgrader market with supply looming in 2011-12, though it showed keen interest for the landmark commercial site redevelopment at City Hall. Downside risk include any significant demand-side cooling measures introduced by the government. Maintain NEUTRAL. – Goldman Sachs (24 Aug)

Healthway Medical Corp
Price – $0.18
Target – $0.23

Healthway Medical registered a disappointing 2Q10 net profit, down 97.2% YoY, due to start-up costs of its new medical centres and lower-than-expected patient load of its new specialists. We have lowered our FY10 earnings estimates to $4.7m from $16m, given the abovementioned reasons and that earnings growth may continue to be dampened by establishment costs of the medical centres that Healthway has planned to open over the years. However, revenue is expected to pick up strongly in FY11, with contribution from its new medical centres in China. Healthway aims to operate and manage 20 centres in China by end FY10 and will continue to expand its network such that China will account for more than half of its revenue in 3–5 year’s time. Healthway also plans to diversify its business to include the development, investment and management of medical developments in the region. Maintain BUY. – DMG & Partners (23 Aug)

Oversea-Chinese Bank
Price – $8.63
Target – $11.00

We lowered our FY10–12 estimates by average 3% to factor in tighter margins, partly offset by higher loan growth and better non-interest income. OCBC’s strength in non-interest income should be the key stock driver over the next 12–18 months. OCBC has a higher non-interest income as proportion of total revenues of 42% compared to UOB’s 32% and DBS’s 37%. Furthermore, OCBC’s loan growth is faster than that of the industry. In the last 3 years, OCBC’s current and saving accounts (CASA) has doubled, with CASA ratio standing at 45% currently. Unrealised gains amounting to $3.4b on OCBC’s Singapore properties were booked, though we do not expect near-term one-shot liquidation. Over the next 3–6 months, we view the clarity on Bank of Singapore’s financials, realization of revenues from cross selling efforts, and signs of stabilization of margins as the stock catalysts. Maintain OVERWEIGHT. – JPMorgan (23 Aug)

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

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Olam Int'l  1.820 -0.020 -1.09%   
Business: Co is engaged in sourcing, processing, packaging and merchandising agricultural products. [FY18 Turnover] Food staples & packaged foods (47.6%), confectionery & beverage ingredients (23.4%), industrial raw materials, infrastructure & logistics (14.9%), edible nuts & spices (14.1%).

Insight: May-19, 1Q19 revenue rose 16.7% due to increased t... Read More
Wing Tai Hldgs  2.040 -0.02 -0.97%   
Business: Singapore-based property developer and lifestyle company. [FY18 Turnover] Development properties (51.5%), retail (36.5%), investment properties (9.6%), others (2.4%).

Insight: Feb-19, 1H19 revenue rose 7.1% to $193.9m largely ... Read More
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
Oversea-Chinese Banking Corp  10.950 -0.08 -0.73%   
Business: [FY18 Turnover] Global corporate/investment banking (35%), global consumer/private banking (34.8%), OCBC Wing Hang (11.5%), insurance (11%), global treasury & mkts (7.7%).

Insight: May-19, 1Q19 total income rose 14.7% driven by str... Read More

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