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Investors Corner (Genting Singapore PLC, Jardine Cycle & Carriage, UOL Group, Sembcorp Industries)
Investors' Corner | 02 March 2012
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By: Louis Kent Lee
Articles (199) Profile

Genting Singapore PLC
Price – $1.64
Target – $1.49

The Singapore government said it is reviewing the Casino Control Act and hopes to disclose more details in the 2H12. The review will look into the economic, security and social issues surrounding the two Integrated Resorts (IRs). Government is looking at introducing additional safeguards including expanding 3rd party casino exclusions as well as introducing time limits and spending limits to help those with poor self-control. We believe any further amendments to the Casino Control Act will likely involve more tightening of rules targeting at Singaporeans and Permanent Residents gamblers as continuous efforts to limit the social impact from the two IRs. In line with government’s move and measures to safeguards locals, we will not discount the possibility that any junkets licensed (in future) will only be allowed to extend credit to foreign players. Recommend HOLD. – Deutsche Bank (27 Feb)

Jardine Cycle & Carriage
Price – $45.28
Target – $50.50

Indonesia’s Energy and Mineral Resources Minister Jero Wacik states that his government is considering raising the price of subsidised fuel by Rp500-1,500/litre (from Rp4,500 /litre) and would be submitting a proposal to the House of Representatives in March. We expect a more limited impact on auto sales if fuel prices are hiked in 2012, as we estimate that fuel costs account for only circa 6% of household income versus circa 9% back in 2008, given the sharp rise in Indonesia’s income levels since. Indeed, our regression analysis suggests that every Rp500/litre increase in fuel price negatively impacts auto sales growth by circa 3%, which implies 3-9% downside to our 2H12/1H13 auto sales growth (assuming price hike by mid-2012). We forecast 2012E 4W/2W sales growth of 13%/12% and 2013E 4W/2W sales growth of 25%/10%. Hence, even if we factor in the fuel price hikes, we still expect positive y-o-y auto sales growth over 2012-13E. Recommend BUY. – Goldman Sachs (25 Feb)

UOL Group
Price – $4.79
Target – $5.10

With strong pre-sales in the past 2 years and land bank thinning, UOL’s Singapore Residential sales understandably slowed in 2011 to 143 units versus record sales of 1,240 units in 2010. But we expect sales momentum to pick up modestly in 1H12 with Archipelago (launched in Dec-11) having sold 160 units as of Feb-12, and Lion City (224 units) scheduled for launch in 2Q12. More importantly, about 90% of FY12 development profits have been locked in with $0.9b of attributable pre-sales unbilled. Investment revenue rose 8% y-o-y, with occupancy stable above 90%; average passing rents of its Retail portfolio rose 8% y-o-y, while its Office portfolio saw average rents fall 3% y-o-y (-7% y-o-y in 2010). Its Hotel arm continued to deliver steady performance with group revenue per-available room up 8% y-o-y and new revenue streams from ParkRoyal in Kuala Lumpur. Management is guided for a cautious 2012 but is well positioned to ride out the residential down cycle in our view, given its good earnings visibility and a good blend of asset diversification. Retain BUY. – Goldman Sachs (26 Feb)

Sembcorp Industries
Price – $5.14
Target – $5.64

Sembcorp Industries’ (SCI) utilities business accounted for 37% of group Profit After Tax and Minority Interests (PATMI) in FY11, versus 29% in FY10, as the management successfully jumpstarted overseas utilities expansion with the full year recognition of newly acquired Cascal’s profits. SCI’s adjusted net profit managed a 6% y-o-y growth to $809m in FY11, which outstripped the 3% y-o-y rise in group revenue to $9b and negated the 20% y-o-y decline in Marine business’ net profit. The Singapore utilities’ PATMI grew 24% y-o-y to $183m in FY11, mainly due to higher power spreads as stronger energy demand tapped on SCI’s lower cost steam power. SCI’s overseas units added to its strong utilities’ PATMI, with across-the-board double-digit y-o-y increase in PATMI, except for Australia. Maintain NEUTRAL. – Bank of America-Merrill Lynch (28 Feb)

Louis is a qualified accountant with the ACCA, and is the Research Editor at Shares Investment magazine.

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Genting Singapore  0.905 -- --   
Business: Develops, operates & mkts casinos & IRs globally, including Australia, M'sia, Philippines & UK. [FY18 Turnover] Gaming (66.1%), non-gaming (33.8%), others & invs (0.1%).

Insight: May-19, 1Q19, despite Co's non-gaming business reg... Read More
Jardine Cycle & Carriage  30.870 +0.07 +0.23%   
Business: Co is mainly engaged in the mfr, assembly, distribution, and retailing of motor vehicles and motorcycles in S'pore, M'sia, Indonesia, and Vietnam.

Insight: Apr-19, 1Q19 revenue rose 1.6% due to higher reven... Read More
UOL Group  7.470 +0.09 +1.22%   
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
Sembcorp Industries  2.180 +0.03 +1.40%   
Business: Primarily engaged in the production and supply of utilities services. [FY18 Turnover] Utilities (55.9%), marine (41.8%), others/corp (2.2%), urban development (0.1%).

Insight: May-19, 1Q19 revenue fell 10.1% to $2.5b due to lo... Read More

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