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Investors’ Corner
Investors' Corner | 31 December 2010
Related stocks:
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By: Ong Qiuying
Articles (131) Profile

Noble Group
Price – $2.07
Target – $2.78
Noble Group’s (Noble) recent acquisition of two Brazilian sugar mills, combined with its two existing UNP facilities, elevated it to one of the top five sugarcane crushers in the low-cost sugar-producing country. The acquired mills, like the existing ones, also come with ethanol and power-producing capability. We expect the acquisition to add 8m tonnes in production capacity to Noble’s existing two UNP facilities per annum and US$50m to net earnings from 2011. The total cost of acquisition amounted to US$950m, implying a trailing P/E of 25x on the past financial year’s inferred net profit of US$38m and the forecast for 2011 suggests a forward P/E of 18.8x. We also take into consideration the strong growth momentum of Noble’s oil trading volume (69% y-o-y for 9M10) and raise our FY10, FY11 and FY12 earnings forecast for Noble by 4%, 17% and 12% respectively. We Retain BUY. – IIFL Securities (22 Dec)

First Resources
Price – $1.47
Target – $2.05
First Resources’ (FR) cash cost of production is expected to come in at US$220-230/tonne in FY10 and continue to remain stable in FY11. Its cost of production is low relative to its regional peers at US$289-350. FR’s trees have an average age of 8 years, falling within the peak production period. With 67% of cash generating trees, FR will be able to support its production growth without stretching its balance sheet. Also, FY11’s FFB production is estimated to jump approximately 13% y-o-y and is expected to double FY10 levels by 2017. We estimate a 6-year production CAGR of 10.6% between 2009 to 2015, assuming no unfavourable weather conditions. This translates into greater earnings for FR, particularly in this high CPO price environment. FR has one of the lowest EV/planted hectares for those with more than 100k hectares planted area. Based on a target P/E of 16.2x on FY11 earnings, we maintain BUY rating. – DMG & Partners (23 Dec)

UOL Group
Price – $4.54
Target – $5.80
UOL Group (UOL) recently announced the acquisition of 133.6m shares (or 9.7%) in United Industrial Corporation (UIC) from United Overseas Bank (UOB) for a total consideration of $320.5m. UOL’s strategic interest in UIC, rises from 32.3% to 42%, and is now in a prime position to influence the future direction of UIC. We view the corporate action by UOL on UIC as positive with consolidated UOL/UIC ticket transforming UOL into a large-cap Singapore proxy to rival that of City Developments. We see near-term share price performance driven by UOL’s 25.5% potential upside. UOL is trading at a wide 36% discount to NAV and 0.78x P/B versus sector average of 26% and 1.32x with the only key risk of any delays in reinvesting cash to rebuild landbank. BUY. – Goldman Sachs (23 Dec)

Midas Hldgs
Price – $0.93
Target – $1.16
With Chinese train manufacturers aggressively selling their high speed train technology to the international market, especially in the US where President Obama is pushing for more high speed rail lines development, Midas Hldgs (Midas) will benefit as it will likely translate into more export orders on top of its strong order book of Rmb1.5b. Midas also announced plans that it is in negotiations to set up a new plant in Henan province, which will increase their aluminium alloy extrusion capacity by another 30,000 tonnes annually, bringing total capacity to 80,000 tonnes. The new plant will enable it to serve its clients in the Central China area and reduce transportation and labour costs. We forecast Midas to record $216.3m revenue and $50.4m net profit for FY10E and $332.3m revenue and $66.4m net profit for FY11E. We also expect more plans for capacity expansion. Midas currently trades at 17.5X FY11E estimated earnings below its 3-years historical average (21X) and industry average (25.0X). Maintain BUY. – Phillip Securities (27 Dec)

Qiuying oversees the construction and real estate investment trusts sectors at Shares Investment.

Please click here for more information about this author.

First Resources  1.600 -- --   
Business: Co engages in the cultivation and maintenance of oil palm plantations. [FY18 Turnover] Refinery and processing (95.5%), plantations & palm oil mill (4.5%).

Insight: Feb-19, FY18 revenue dipped 2.1% due to lower aver... Read More
UOL Group  7.470 -0.04 -0.53%   
Business: Co engages in property development, property investments, and hotel businesses. [FY17 Turnover] Ppty devt (52.2%), hotel ops (23.6%), ppty invs (14.9%), invs & others (9.3%).

Insight: Aug-18, 1H18 revenue jumped 72.9% to $1.3b attribu... Read More
Midas Hldgs  -- -- --   
Business: Manufacturer of aluminium alloy extrusion products for China's rail transportation sector. [FY16 Turnover] Aluminium alloy (99.3%), polyethylene pipe (0.7%).

Insight: Jan-18, Co announced that its JV company, CRRC Nan... Read More


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