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Investors’ Corner
Investors' Corner | 19 November 2010
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By: Gilbert Chia
Articles (13) Profile

China Animal Healthcare
Price – $0.37
Target – $0.34
China Animal Healthcare achieved net profit of Rmb18.4m on sales of Rmb160.9m for 3Q10. The topline’s 23.7% y-o-y and 16.4% q-o-q increase was contributed mainly by sales and margin growth in the vaccine segment. Starting from a relatively low base, this new business grew 178% y-o-y and 61.2% q-o-q. Also, gross margins improved from 74.2% in 2Q to 75.1% this quarter due to economies of scale. We should add here that, despite the high growth figures, the lack of contribution from HFMD vaccine meant a far miss from our expectations. The delay in obtaining the HFMD vaccine license caused a significant difference to our model. We reduced our revenue forecast for FY10 to FY12 by 20.8%, 13.1% and 15.3% respectively. However, we believe that the delay has not disrupted the fundamentals of the Company. Moreover, there is a potential rerating opportunity when the Company successfully list on the Hong Kong exchange by introduction. HOLD. – AmFraser (15 Nov)

Otto Marine
Price – $0.36
Target – $0.48
Otto Marine (Otto)’s 9M10 revenue and profit account for 80.6% and 65.5% of our prior FY11 forecast respectively. The weaker than projected profit is mainly attributable to lower recognition from the shipbuilding and specialized services segments. Shipbuilding revenue dropped 54.2% q-o-q to $49.9m as a result of equipment delays for certain vessels, which prohibits Otto from recognizing the revenue as milestones are not met. Consequently, gross profit recorded a loss of $2.5m for this quarter. Revenue for chartering segment increased 49% q-o-q to $10.9m owing to larger fleet size. Gross margin rose by a larger 79.5% q-o-q to $6.8m as the leasing segment, which generally has a higher margin, grew larger. We expect the shipbuilding division’s earnings to be lumpier going forward as any sales of existing vessels will spike the profit significantly. We continue to be comfortable with the chartering division as most of the vessels are on long-term charter. Maintain INCREASE EXPOSURE.SIAS Research (15 Nov)

Golden Agri-Resources
Price – $0.76
Target – $0.78
Golden Agri-Resources posted 43.4% y-o-y and 32.8% q-o-q jump in 3Q10 revenue to US$964.7m, aided by the strong rally in CPO (crude palm oil) prices over the quarter as well as a strong 21% q-o-q recovery in CPO output. Net profit rose 40.6% y-o-y and 50.1% q-o-q to US$99.2m; excluding an exceptional item of $6.1m (for impairment of receivables), core net profit would have come in around US$105.2m. 9M10 revenue of US$2315.5m (+40.3%) met 79.6% of our full-year forecast, while net profit surged 89.0% to US$253.7m (core of US$259.8m met 68.2% of our FY10 estimate). The group maintains a positive outlook for CPO in the medium to long term, citing the growing consumption of edible oils and fats in countries such as China, India and Pakistan. We raise our FY10 revenue forecast by 13.4%, but cut our earnings estimate by 5.5% on lower margin assumptions. This has no impact on the fair value of $0.78 (already based on 16x FY11 EPS). HOLD. – OCBC Investment (12 Nov)

Ezion Hldgs
Price – $0.74
Target – $0.82
Ezion Holdings (Ezion) reported a 120.7% y-o-y rise (+39% q-o-q) in revenue to $45.7m and a 143% increase (but -39.4% q-o-q) in net profit to $10.0m in 3Q10. Revenue was much higher than expected and we understand that the group had undertaken an ad-hoc marine services project in relation to the Gorgon project, contributing $11m to total revenue. The increase in share of profit of JV companies to $2.4m was mainly due to the positive contribution from the group’s JVs in Australia and the multi-purpose self-propelled jack-up rig. The increased revenue was due to contribution from the chartering of the group’s liftboats, deployment of vessels to its JV company in Australia in support of the Gorgon gas field, and the ad-hoc project. Demand for Ezion’s liftboats is expected to remain good. The group will also continue to pursue business opportunities and projects in Australia and its vicinities. Maintain BUY. – OCBC Investment (12 Nov)

Golden Agri-Resources  0.265 -0.010 -3.64%   
Business: Co is engaged in cultivating & harvesting oil palm trees, processing fresh fruit bunches (FFB) into crude palm oil (CPO) & palm kernel (PK), & refining CPO into industrial & consumer pdts.

Insight: May-19, 1Q19 revenue fell 11% due to softer crude ... Read More
Ezion Hldgs  -- -- --   
Business: Co develops, owns, and charters offshore assets to support the offshore energy markets. [FY17 Turnover] Liftboats (49.7%), Jack-up Rigs (39.5%), Offshore Support Logistic Services (10.8%).

Insight: Aug-18, 1H18, Co returned to the black with a net ... Read More

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