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Investors’ Corner (TigerAir, Wilmar, Frasers Comm, Genting SP)
Investors' Corner | 13 April 2012
Related stocks:
F34
G13
By: Gerald Teo
Articles (40) Profile

Tiger Airways Holdings
Price – $0.74
Target – $0.90
Strong earnings turnaround is expected with the normalisation of Tiger Airways Australia’s operations and continued passenger/ancillary income growth. Tiger benefits from the strong financial backing of majority shareholders Temasek Holdings and Singapore Airlines (SIA). Other positive drivers include: new joint ventures Southeast Asian Airlines (Philippines) and Mandala (Indonesia), which could help drive Tiger’s earnings growth and regional franchise in these fast-growing markets; move to Changi Airport T2 could help boost traffic feed; potential collaboration with Scoot could drive synergies. A potential merger with Scoot or takeover by majority shareholder SIA is possible in the longer term, in our view. Although the near-term outlook is challenging and current valuations look unattractive given Tiger’s low earnings base, we believe the expected earnings turnaround in FY13 and our estimated 108% p.a. net profit growth in FY14-15 has not been priced in. Initiate OVERWEIGHT. – JP Morgan (10 Apr)

Wilmar International
Price – $4.79
Target – $6.00
Wilmar added 10 new soybean crushing plants in China and two more in Africa, resulting in a higher total crushing capacity of 20m tonnes p.a. in 2011 (2010: 18m tonnes p.a.). This enhances our view that Wilmar provide the best proxy to the rising consumerism in emerging markets. Wilmar’s China soybean crushing margin has turned positive since 15 Mar-12 and this is due to the rising soybean oil prices. We believe Wilmar’s 1Q12 crushing margin would be better than in 4Q11 when Wilmar had just barely broken even with the US$0.30/tonne of pre-tax margin. Wilmar’s Malaysia refining business should be able to narrow the losses in 4Q11 or break even in 1Q12. The realised CPO prices for most upstream players are at a wider discount (from RM40/tonne to RM60-80/tonne) to Malaysian Palm Oil Board’s spot prices and future prices as refiners are protecting their margins. Maintain BUY. – UOB-Kay Hian (10 Apr)

Frasers Commercial Trust
Price – $0.85
Target – $0.93
The interest rate for the newly secured facility is based on the bank bill swap bid rate plus a margin of 1.7%, higher than the 1.55% margin Frasers Commercial Trust (FCT) received when refinancing a A$105m ($136.2m) term loan in Nov-11. We expect the acquisition of Caroline Chisholm Centre to lift FY12-13F DPU by 1.9% and 4.6% respectively, assuming a 6% cost of financing the asset. As a result, our post-acquisition gearing estimates will increase from 37% to 40%. In our view, FCT is likely to embark on asset enhancement initiatives (AEIs) after taking over direct management of China Square Central (CSC) in Mar-12. FCT may also revive plans to redevelop the site into a hotel. We expect CSC’s occupancy may dip temporarily in 2012-13 if FCT embarks on AEIs. In addition, we also expect occupancies to be softer as a major tenant Marsh and McLennan is due to vacate a large proportion of the property in mid-12. We maintain our net property income and interest expense forecast. Reiterate BUY. – UOB-Kay Hian (09 Apr)

Genting Singapore
Price – $1.67
Target – $1.47
The newly issued perpetual securities will be accounted for as equity, same as the $1.8b issuance that was done in mid-March, in our view. The annual distribution to the new perpetual security holders is estimated to further reduce profit attributable to common shareholders by around $36m (assuming the $200m greenshoe option is exercised). More importantly, we believe that Genting Singapore cannot pay common shareholders any dividends before they satisfy the distributions payable to the perpetual holders. Given management’s guidance of capital expenditure requirement of only around $500m in 2012 and dividend payment of about $122m, we suspect most of the funds raised will be used towards investment opportunities outside Singapore. Management views this as a good opportunity to build up its war chest, but we continue to question the timing of such fundraising exercise. We think the stock is expensive given the difference in growth profiles between Singapore and Macau. Maintain SELL. – Citigroup (09 Apr)

Wilmar Int'l  3.310 +0.01 +0.30%   
Business: Co's integrated agribusiness model encompasses the entire value chain of the agricultural commodity processing biz, from origination and processing to branding, merchandising and distribution of a wide range of agricultural pdts.

Insight: Feb-19, FY18 revenue inched up 2.1% to US$44.5b dr... Read More
Frasers Commercial Trust  1.450 -0.010 -0.68%   
Business: Co invests in a diverse portfolio of real estate and real estate related assets, primarily focusing on office and retail assets.

Insight: Jan-19, 1Q19 gross revenue fell 10.7% to $31.5m ma... Read More
Genting Singapore  1.030 -0.010 -0.96%   
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: Feb-19, FY18 revenue rose 6.1% as both the gaming ... Read More


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