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Investors’ Corner
Investors' Corner | 20 May 2011
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By: Choo Hao Xiang
Articles (151) Profile

ComfortDelGro Corp
Price – $1.49
Target – $1.86
In line with our expectations, ComfortDelGro Corp’s (CDG) 1Q11 revenue grew by 4.7% year-on-year to $803m, driven by growth in all business segments. But higher operating costs dragged earnings lower by 7.7% to $50.1m. Net debt improved from 6.1% in 4Q10 to 4.4%, which continues to put CDG in a good position to pursue acquisitions. CDG will continue to benefit from higher rider-ship and taxi fleet in Singapore, while the successful bid for the Downtown Line may serve as a longer-term catalyst. We have already factored in an average oil price of US$105/bbl in our forecasts, which is still above the YTD average price. We continue to like CDG for its more attractive valuation and geographical diversity. CDG currently trades at 13.6x FY11F PE compared to SMRT’s 18x FY11F PE. Maintain BUY. – DBS Vickers (16 May)

Golden Agri-Resources
Price – $0.67
Target – $0.96
Meeting 37% of our FY11 forecast, Golden Agri-Resources’ (GAR) 1Q11 revenue surged 134% year-on-year to US$1463.0m, on the recovery from the earlier tree stress and still-high CPO prices. Gross profit margin improved to 35.9%, versus 27.7% in 1Q10. Net profit rose 161% year-on-year to US$230.7m. GAR believes it should be able to achieve a 5-10% rise in CPO production for 2011. This year, GAR intends to invest some US$450m as capex, largely for its expansion in the high-margin upstream business. Other plans include shifting product mix into higher value-added products and developing its destination business and extending the distribution reach of value-added CPO products in key countries. We raise our FY11 revenue estimate by 3.3%, due to lower CPO price assumption in 2H11 on higher CPO supply and earnings forecast by 22.7% to account for improved margins. With a target price based on a 16x FY11F EPS, we maintain a BUY rating. – OCBC (16 May)

STX Pan Ocean Co
Price – $9.94
Target – $9.80
STX Pan Ocean had a disastrous 1Q11, with a core net loss of US$67m against our previous full-year profit forecast of US$37m. Only 20% of its contracts of affreightment (COA) have bunker adjustment factors (BAF) which protect it from higher fuel prices. If all of its COAs had bunker pass-through, the firm would have earned US$40m more profit in 1Q11. The practice of not incorporating BAFs in COAs with less than one year’s duration makes this business dangerous to write in an environment of high oil prices. With bunker prices remaining elevated, the firm is poised for further losses in 2Q11. Hence we slash our FY11 forecast to a core loss of US$135m from a core profit of US$37m. Our FY12-13 forecasts have been reduced by 13-16%. Maintain UNDERPERFORM. – CIMB (16 May)

UOL Group
Price – $4.90
Target – $6.03
Profits from projects sold under the deferred payment scheme (DPS) and overseas projects are now booked upon completion (versus percentage of completion previously). As such, UOL’s 1Q11 PATMI rose 133% on-year to $230m on the restatement of profits from Duchess Residences. Net debt fell by $60.8m to $1.83b (net debt/equity = 0.35x). UOL plans to allocate 60% of the GFA at the Lion City Hotel mixed-use site for retail development and the rest for SOHO development. The Bedok Reservoir Road residential site is likely to be launched by year-end. Though these projects may be launched into a slowing market, UOL’s entry prices may help to mitigate this risk. Ascribing a 25% discount to UOL’s gross asset value estimate, our price target implies FY11F P/B multiple 1x, a premium to the historical average 0.8x. Maintain BUY. – Nomura (15 May)

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

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ComfortDelGro Corp  2.420 -0.02 -0.82%   
Business: [FY18 Turnover] Public transport services (71.2%), taxi (19.1%), others (9.7%).

Insight: May-19, 1Q19 revenue rose 7.8% to $947.3m, underpi... Read More
Golden Agri-Resources  0.205 -0.005 -2.38%   
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
UOL Group  7.530 +0.05 +0.67%   
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

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