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Investors’ Corner
Investors' Corner | 17 December 2010
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By: Cassandra Sim
Articles (14) Profile

City Developments
Price – $12.80
Target – $11.90
Due to continued high liquidity in Asia, we consider it highly probable that the government will introduce harsher regulations to deflate the property bubble. We expect CDL, with its land bank strategy, to be most affected by recent government rules aimed at preventing land hoarding via increased penalties. We also expect the capital value of CDL’s commercial portfolio to appreciate next year on the back of higher transaction volume and rents. However, we do not anticipate significant new commercial sector investments going forward as we expect the company to concentrate on its South Beach development. We also expect CDL’s 54%-owned subsidiary, M&C, to continue to do well on the back of projected global economic growth of 3.9% in 2011. We upgrade CDL to HOLD and raise our RNAV-based target price to $11.90. However, we believe regulatory overhang on Singapore residential properties will weigh on the stock. Upgrade to HOLD. – RBS (13 Dec)

OKP Hldgs
Price – $0.565
Target – $0.83
OKP announced last week the award of an $83.5m contract for the construction of a condominium development at Angullia Park and this win affirmed our view that OKP’s order book renewal process is proceeding smoothly. Had this been consolidated as a subsidiary, we estimate that it will have added about $17.9m to OKP’s FY11 top-line. Consequently, this will allow OKP to draw upon the expertise of an established player in property construction while building its own competency in this sector of the construction industry. In addition, OKP is the lowest bidder for a contract to widen a section of Old Choa Chu Kang Road with a tender amount of $28.5m. The successful award of a Downtown Line 3 contract will also significantly boost OKP’s order book. We project that OKP now needs only another $47.7m worth of contracts to meet our earnings expectations for FY11 – an achievable outcome. Maintain INCREASE EXPOSURE. – SIAS Research (13 Dec)

OSIM Int’l
Price – $1.63
Target – $1.68
OSIM announced that it had submitted an application for the offering and listing of 85m TDR units, at a temporary indicative offer price of NT$20.80. The proceeds will be used to develop OSIM’s specialty retail outlets so as to expand the scale of its business in China. Key benefits of the proposed TDR listing includes diversifying its shareholder base and providing an additional fund-raising platform, monetising its treasury shares and ultimately to increase awareness of OSIM’s brand name in Taiwan. On top of these, there will be no dilution effect on existing shareholders. However, we note that OSIM is already an established brand name in Taiwan, given that it has been a key market since 1987. We retain our estimates for now but roll forward our valuation to 22x FY11 earnings. While we continue to like OSIM for its strong execution capabilities and innovative products, we believe that the market has already priced in most of these positives as well as the benefits the TDR listing could bring. At current price, we downgrade to HOLD on valuation grounds. – OCBC Investment (13 Dec)

Yangzijiang Shipbuilding (Hldgs)
Price – $1.94
Target – $2.57
Yangzijiang (YZJ) had secured US$1.3b worth of orders in 3Q10 with pockets of orders in 4Q10. We believe the strength in containership orders could make up for softer demand for bulk carriers in 2011. As such, we upgrade our order assumption from US$800m to US$1b for 2011 and our FY11-12 earnings estimates by 3%. Stock catalysts could include stronger-than-expected order wins and margins, in our view. The container sector’s order book to fleet ratio of 13% is much lower than its 4-year average of 20%, with only 277 containerships scheduled for delivery in 2011, adding 6% to the global fleet. Excluding state-owned yards, YZJ ranks first in terms of contract wins with about US$150m worth of containership orders YTD. Given this leading position, we believe YZJ should benefit from any further uptick in the containership sector. Maintain OUTPERFORM. – CIMB (14 Dec)

OKP Hldgs  0.205 +0.005 +2.50%   
Business: An infrastructure and civil engineering company. [FY18 Turnover] Construction (50.9%), maintenance (44.6%), rental income (4.5%).

Insight: May-19, 1Q19 revenue slid 16.8% due to decreased r... Read More
City Developments  8.470 -0.14 -1.63%   
Business: Co is an international property & hotel conglomerate. [FY18 Turnover] Property development (48.4%), hotel operations (39.8%), rental properties (8.5%), others (3.3%).

Insight: May-19, 1Q19 decreased 29.5% to $746.2m compared t... Read More
Yangzijiang Shipbuilding (Hldgs)  1.440 -0.030 -2.04%   
Business: Co is one of the largest non-state owned shipbuilders in China. [FY18 Turnover] Shipbuilding (58.1%), trading (32.8%), investments (6.7%), others (2.4%).

Insight: Apr-19, 1Q19 revenue jumped 26.8% to Rmb6.3b due t... Read More

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