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Investors’ Corner (FJ Benjamin, ConscienceFood, Genting HK, Yangzijiang, Keppel Land)
Investors' Corner | 26 August 2011
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By: Gerald Teo
Articles (40) Profile

F J Benjamin Holdings
Price – $0.315
Target – $0.39
Revenue growth was driven by strong consumer demand across all its major markets in Southeast Asia and North Asia. Sales in Indonesia alone increased by 7% y-o-y. The timepiece segment posted the strongest y-o-y growth of 34.8%, while the fashion segment grew by 16.5% y-o-y and the licensing segment 18.9% y-o-y. FJB has a total of 166 stores as at end‐FY11. It plans to increase its number of stores to 190 in the next fiscal year with additions mainly in Malaysia and Indonesia. Capex for FY12 is expected to reach $12.6m, including expenditures to improve existing stores. This is part of its organic growth strategy to expand its brand portfolio and capture market share amid an uncertain global economy. Despite FJB’s in‐line FY11 performance, we cut our FY12F‐14F profit by 10‐15% as we expect the current economic uncertainties to eventually dampen consumer demand in Asia. Peer valuation also has declined. Maintain BUY. Kim Eng (23 Aug)

Consciencefood Holding
Price – $0.215
Target – $0.35
We expect sequential improvement in margins as seen in 2Q on lower raw material prices. Wheat prices are now trading at lowest levels in the last 4 quarters. We expect FY11F’s earnings to be supported by instant noodle sales volume growth of 29%. New products will further drive growth in FY12F as its cup noodles production ramps up from 2Q11, and beverage business starts from 2H12. 2Q11 results were within consensus, but below our aggressive estimates. This came about on lower than expected sales volumes, as we had expected strong 1Q growth of 48% y-o-y to continue into 2Q. We have adopted a more conservative stance in our earnings estimate, and trimmed our FY11F/12F earnings forecasts by 11%/23% due to a moderated increase in instant noodles volume, slower ramp up in cup noodles, and adjustment in the startup of its beverage business into 2H12. Maintain BUY. DBS Vickers (22 Aug)

Genting Hong Kong
Price – US$0.30
Target – US$0.51
Going by the recent splendid 2Q11 results of its 50%-owned Norwegian Cruise Lines (NCL), Genting Hong Kong seems to be not only riding growth in the Philippine gaming market but also reaping the rewards of a recovery in its traditional turf of the cruise business. We lifted our earnings estimates for Genting Hong Kong by 30-39%, to factor in stronger expectations for its Star Cruises and Travellers operations. While taking a cautiously positive view on the US cruise industry, we remain upbeat on the Philippine gaming market; even its Asia-based Star Cruises shows growth prospects. Our previous forecasts for Star Cruises and Travellers appear too conservative. Meanwhile, although NCL posted robust 2Q11 results, we are keeping our forecasts until further clarity emerges on growth in advanced economies. We maintain our OUTPERFORM rating, expecting catalysts from the continuous ramp-up of Resorts World Manila, better-than-expected NCL and Star Cruises operations, and opportunities to enter other jurisdictions, particularly Taiwan. CIMB (22 Aug)

Yangzijiang Shipbuilding
Price – $0.97
Target – $2.00
While the outlook for the bulk carrier market remains bleak, the company has seen continued enquiries for its newly designed fuel-efficient 4,800 twenty-foot equivalent unit (TEU) and 10,000 TEU containerships. Management does not expect any order cancellations due to its strong financial position, progressive payments received and the shift of customer mix towards Asia-based end-users. Management noted market concerns about its held-to-maturity investments and sought to explain the rationale and risk-management procedures. The investments are fixed rate instruments offered by

Chinese banks and trust companies used in the financing of Chinese corporates from diverse industries. The loans are backed by single or a group of collaterals including listed shares (37%), land titles (41%) and guarantees (22%). Yangzijiang is trading at 2011E PE ratio of 5.5x and PB ratio of 1.7x (versus trough of 1x in the 2008/09 crisis). We believe that at this depressed valuation, a corporate share buyback is imminent. Maintain OUTPERFORM. Credit Suisse (22 Aug)

Keppel Land
Price – $3.00
Target – $5.30
Keppel Land announced that its subsidiary Keppel Land China has secured a 21.5ha lakefront residential site in Binhu District, Wuxi for Rmb1.937b ($368m) or Rmb5,999 per sqm gross floor area for the development of around 2,500 residential units and commercial space. The site is the last available for development in the vicinity and is situated within Binhu District in a high-end residential precinct which encompasses a national wetland park and Li Lake. With this acquisition, Keppel Land’s China residential pipeline increases further to approximately 43,860 homes. We estimate a breakeven cost in the region of Rmb11,000 per sqm which implies gross margin of around 20% based on average selling price of Rmb14,000 per sqm resulting in a 4 cents per share accretion to NAV (+1%). Our China property analysts see significant potential in the region with Binhu district as the main focal area of the government’s urban development plans and should benefit from further infrastructure improvements and projects planned such as schools, hospitals, retail malls, offices and hotels. Recommend BUY. Deutsche Bank (21 Aug)

F J Benjamin Hldgs  0.031 -0.001 -3.13%   
Business: Co engages in the brand building and management, and development of retail and distribution networks for international luxury and lifestyle brands.

Insight: Aug-18, FY18 net loss narrowed significantly to $1... Read More
Yangzijiang Shipbuilding (Hldgs)  1.050 -0.030 -2.78%   
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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