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Investors’ Corner (ComfortDelGro, TigerAir, ChinaMinzhong, IndoAgri, SingTel, Wing Tai)
Investors' Corner | 17 February 2012
Related stocks:
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By: Andy Chor
Articles (7) Profile

ComfortDelGro Corporation
Price – $1.48
Target – $1.51

ComfortDelGro Corp’s (CDG) FY11 revenue growth of 6% y-o-y was broad-based with increases seen in CDG’s taxi (up 10%), rail (up 8%), vehicle inspection units (up 12%) with the most notable being Australian bus operations which increased 27%. CDG had proposed a final DPS of $0.033 which will lift 2011 DPS to $0.06. Despite capex remaining fairly high in 2012 to 2013 at around $500m each year, the small increase in payout ratio to 53%, in our view, signals a subtle change in CDG’s view of its cash requirements. We expect 100% hired-out rate and stable margins for Singapore taxis, with Australia buses offering margins protection through cost-plus agreements and potential acquisition opportunities in 2012. We believe CDG’s hesitance to distribute a more generous dividend to be one of the factors limiting a major stock re-rating, which led us to maintain NEUTRAL. – UBS Investment (14 Feb)

Tiger Airways Holdings
Price – $0.80
Target – $0.55

Tiger’s Jan-12 passenger traffic fell 14% y-o-y to 4.7m, with Tiger Australia operating on a limited schedule (32 sectors per day). However there are tentative signs of improving demand with Jan-12 traffic falling only 3% from the peak period in Dec-11, versus 3-year average decline of 6% m-o-m. Also, the Australian regulator had raised its daily limit to 38 sectors per day. 33% owned Mandala Airways will absorb 88% of Tiger’s Mar-13 aircraft deliveries, but this hinges on Mandala reactivating the Aircraft Operator’s Certificate later this month. If complications arise with Mandala’s application, the underutilisation of aircrafts will lead to larger losses for Tiger Singapore. With an unattractive risk-reward profile, potential delays in the restart of Mandala or the breakdown of the Philippines venture, as well as and the departure of its CEO which could be unsettling for the markets, a UNDERPERFORM call is maintained. – Credit Suisse (14 Feb)

China Minzhong Food Corporation
Price – $1.01
Target – $0.95

China Minzhong Food Corp (CMF) reported 2Q12 net profit had increased by 12% y-o-y to Rmb175m, bringing 1H12 net profit to Rmb268m – an increase of 28% y-o-y. The results missed estimates due to the late arrival of winter which delayed champignon mushrooms harvest and sale towards 3Q12, together with higher operating expenses. Against guidance, 1H12 also saw no new farmland cultivation. 2Q12 saw lower margins stemming from higher costs of selling and distribution, administrative and financial expenses. Rising costs from land, labour and raw materials (fertilisers) saw gross profit margins for fresh vegetables to drop to 55%. Processed segment revenue and gross profit growth was limited to 3.4% and 5.1% y-o-y due to the late arrival of winter. Going forward, fertiliser costs and crude oil price may remain high, while labour cost is still expected to increase marginally. The abovementioned points, together with higher short term interest rate (8.5% versus 7.5%) led us to believe that CMF’s share price upside would be limited. Thus, we downgrade its rating to NEUTRAL. – JP Morgan (13 Feb)

Indofood Agri Resources
Price – $1.61
Target – $1.74

With our projected 6% reduction in crude palm oil (CPO) prices for 2012 to 2013, we refreshed our estimates for Indofood Agri Resources (IFAR). IFAR’s medium term growth and return on equity lag those of Golden Agri-Resources and First Resources mainly due to the listing of its subsidiary PT Salim Ivomas Pratama. Subsequently, IFAR repositioned itself as an agribusiness holding company and is now pursuing brownfield agricultural assets in the equatorial belt. So far, no deals had been done. We think that the re-rating process back to 12x forward PE is entering its final stages with itself currently hovering at 11x PE, also considering its historical average multiple being 11.3x. We have IFAR yields trending back to historical 20 ton per hectare type levels by 2015. With less than 10% of total return forecast, we downgrade its rating to NEUTRAL. – Macquarie Research (13 Feb)

SingTel
Price – $3.13
Target – $3.33

Singapore profitability was impacted by rising subscriber acquisition cost trends coupled with SingTel’s inability to monetise mobile market share gains. Fixed line, broadband and international telephone growth continued to see pressure with alternative products. While Optus’ underlying profit rose 4%, revenue remained stable with 2% growth versus Telstra’s 10% growth for 1H12, mainly due to intensified competition. Indian operations were disappointing as tariff increases were offset by minutes of usage declines and a loss of market share, overshadowing positive free cash flow trends in Africa. Currency trends were unfavourable with $ appreciating against most regional currencies except A$. In the medium term, prospects for dividend surprises are slim with limited catalyst on the horizon for the stock to re-rate further. Downgrade to NEUTRAL. – Citigroup (13 Feb)

Wing Tai Holdings
Price – $1.30
Target – $1.63

Wing Tai’s (WT) 1H12 net profit increased by 46% to $59.3m with an EPS of 7.6 cents which was below expectations of $80.8m. Singapore residential profits encapsulate the progressive recognition of Foresque Residences and L’VIV. However, completed projects achieved fewer units sold y-o-y. Units sold was estimated at 80% of the units launched from six projects with only circa 100 units sold in the second half of 2011, versus circa 300 units in the first half. Associates’ contribution rose 62% y-o-y to $50.1m, a reflection of higher contribution from two other Singapore projects as well as WT Properties in Hong Kong. With gearing at 26%, WT’s financial position allows for potential land acquisitions as land prices, which had in some cases, fell as much as 25% recently. We still see value, with the shares trading at 0.52x PB and at a 45% discount to revised NAV. Maintain OUTPERFORM. – Macquarie Research (13 Feb)

ComfortDelGro Corp  2.460 +0.01 +0.41%   
Business: [FY18 Turnover] Public transport services (71.2%), taxi (19.1%), others (9.7%).

Insight: Feb-19, FY18 revenue rose 6.4% attributable to inc... Read More
Indofood Agri Resources  0.205 -0.005 -2.38%   
Business: Diversified agri-business mfg & retailing cooking oil, with oil palm, rubber & sugar plantation in Indonesia. [FY18 Turnover] Edible oil & fats (75.4%), plantations (24.6%).

Insight: Feb-19, FY18 revenue slid 10.6% mainly due to lowe... Read More
Singtel  3.020 -0.01 -0.33%   
Business: Asia's leading communications group. [FY18 Turnover] Mobile Comm (34.0%), Data & Internet (19.6%), Infocomm Technology (17.5%), Sale of Eqmt (11.6%), Digital Biz (6.3%), National Telephone (5.5%), Int'l Telephone (2.4%), Pay-TV (2.1%), others (1.0%).

Insight: Feb-19, 9M19 operating revenue remained flat at $1... Read More
Wing Tai Hldgs  2.000 -0.02 -0.99%   
Business: Singapore-based property developer and lifestyle company. [FY18 Turnover] Development properties (51.5%), retail (36.5%), investment properties (9.6%), others (2.4%).

Insight: Feb-19, 1H19 revenue rose 7.1% to $193.9m largely ... Read More


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