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Investors’ Corner (Cordlife, Sakari, GuocoLand, UOB)
Investors' Corner | 27 April 2012
Related stocks:
F17
P8A
U11
By: Gerald Teo
Articles (40) Profile

Cordlife Group
Price – $0.55
Target – $0.66

We like Cordlife for its market leadership in Singapore and Hong Kong (62% and 28% market share respectively), and it currently stores more than 35,000 cord blood units. Cordlife has the right-of-first-refusal to acquire its former parent’s operations in developing markets – India, the Philippines and Indonesia, which boast one of the highest income growth rates and the lowest penetration rates for cord blood banking services in Asia. Cordlife currently has about 20,000 customers enrolled under the annual payment scheme, contributing $5m of stable and recurring cash flow annually. This amount is likely to grow as Cordlife expands its customer base. Cordlife will realise margin expansion from sub-leasing income and rental savings after the group relocates to Yishun A’Posh Bizhub, which is owned by the group. We forecast gross margin to increase from 69% in FY12 to 71% in FY14, and net margin to increase from 29.9% in FY12 to 35.1% in FY14. Initiate BUY. – UOB-Kay Hian (24 Apr)

Sakari Resources
Price – $1.98
Target – $1.65

We forecast FY12E EPS to be US$0.11 or $0.138, nearly 40% below the consensus of US$0.186. We expect profit margins to be squeezed from softening coal prices, lower total production volumes and a higher cash costs per tonne (t) from the Jembayan mine. Two new pit developments at Jembayan are expected to incur a higher cash costs per tonne initially. We view that positively from a longer term view—it is better to bite the bullet now amidst softening coal prices and be able to ramp up production to full capacity when coal prices turn up, than otherwise. Prices are expected to remain soft in 2012, with forecasted Newcastle coal prices at an average of US$108.5/t, down 10.28% from 2011’s average of US$120.94. Coal prices are expected to bottom out by 2012 and rise steadily towards 2013 and 2014. We expect FY13E earnings outlook to be better and we continue to like the underlying business at Sakari. Nevertheless, we expect share price to dip in the near-term. Initiate SELL. – AmFraser Securities (24 Apr)

GuocoLand
Price – $1.83
Target – $2.10

Core earnings of $9.2m for 9M12 (excluding mark-to-market and foreign exchange losses) came in below our expectations mainly due to lower income recognition from Goodwood Residences project in Singapore and no contribution from its China projects, which can be recognised only on completion. We slash our FY12 net profit forecast by 43% due to the delay in the completion of its Seasons Park development in Tianjin and raise our FY13 and FY14 forecasts by 8% and 11% respectively. Management noted that sentiments for the residential markets in Singapore (in particular, the luxury market) and China have been affected by cooling measures and weaker growth forecasts. The target price is pegged at a 30% discount to our revised NAV of $2.95/share. The 30% discount factors in policy headwinds, slower sales across its portfolio and a high gearing of 1.74x. Maintain HOLD. – UOB-Kay Hian (23 Apr)

United Overseas Bank
Price – $18.49
Target – $19.00

UOB reported a 7 basis points q-o-q margin increase in its 4Q11 results. We suspect net interest margins will rise further in 1Q12, which combined with solid loan growth leads us to forecast 6% q-o-q net interest income growth. Non-interest income should also rebound after a disappointing 4Q11, and we expect overall revenue growth of 8% q-o-q. We do not expect any material deterioration in credit quality which should see credit costs broadly in line with the 4Q11 level. Underlying non-performing loan trends in core markets should remain at very low levels although we would not be surprised to see more problem loans in the ‘other’ loan segment which includes European loans and represented 6% of the book as of 4Q11. Although we suspect the result could provide near-term share price support, we continue to maintain a HOLD rating as the stock trades closer to our target price. – Deutsche Bank (23 Apr)

GuocoLand  1.990 -0.010 -0.50%   
Business: Co is a ppty dvlpr. [FY18 Geography] S'pore (87.8%), M'sia (6.5%), China (0.5%), Vietnam (0.2%), Others (5%).

Insight: Apr-19, 9M19 revenue slid 37.3% due to lower sales... Read More
Cordlife Group  -- -- --   
Business: Co is in the business of cord lining banking and holds the largest market share of private cord blood banks in Singapore, Indonesia and the Philippines.

Insight: Feb-19, 18M18 revenue increased 13% to $12.1.m mai... Read More
United Overseas Bank  26.370 -0.04 -0.15%   
Business: [FY18 Turnover] Group retail (43.3%), group wholesale (43.2%), global markets & investment management (5.1%), others (8.4%).

Insight: May-19, 1Q19 total income rose 7.8% to $2.4b due t... Read More


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