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Investors’ Corner (Petra, STXOSV, TigerAir, Genting SP)
Investors' Corner | 25 May 2012
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By: Scott Lee
Articles (3) Profile

Petra Foods
Price – $2.45
Target – $2.01

Petra Foods announced that 1Q12 PATMI of US$16.3m grew 20.5% y-o-y led by strength in Branded Consumer largely as a result of successful implementation of price hike in Aug-11 to mitigate the anticipated higher input costs in 2012. Growth momentum came from sterling demand for Own Brand and Third Party brands in Indonesia as well as Agency Brands in Indonesia. Contribution from Cocoa Ingredients was weaker in 1Q12 as revenue fell 12.7% y-o-y due to the pass-through effect of weaker cocoa bean prices and a 0.2% y-o-y dip in sales volume. However, EBITDA grew 1.4% y-o-y to US$16.4m, likely due to higher sale volume of higher-margin customized products in 1Q12, resulting in higher EBITDA yield of US$242/metric ton. 1Q12 PATMI of US$16.3m amounted to 22% of our FY12 earnings estimate of US$72.6m. Although the growing Asian chocolate consumption trend bodes well for Petra which has an established distribution network and strong branding in Asia, we have lowered our FY12 PATMI forecast. This is in view of new processing capacity in 2012 in Indonesia and uncertainty in the new auction system for cocoa beans in Ivory Coast. NEUTRAL. – NRA Capital (21 May)

Price – $1.61
Target – $1.90

The Maeil Business Newspaper (South Korea’s main daily business newspaper) has reported, citing unidentified industry officials, that the STX Group has reached an agreement to sell its 50.75% stake in STX OSV to Italian shipbuilding Fincantieri and private-equity firm, Carlyle Group, at about $1.60/share. The report states that a preliminary agreement is expected to be signed some time this week. STX OSV has not made any official announcement on this. If the deal goes through, it will most likely trigger a mandatory offer (Fincantieri and Carlyle appear to be acting in concert) which, under local takeover rules, must be at a consideration not less than the highest price paid by the offeror within 6 months prior to the offer period. We continue to like STX OSV’s fundamentals and attractive valuations (8.4x forward PE) but acknowledge that in the absence of a general offer, the stock is unlikely to do well in the current de-risking environment. BUY. – Citigroup (21 May)

Tiger Airways Holdings
Price – $0.64
Target – $0.51

Tiger Airways reported 4Q12 net loss of $16.4m. Operating losses worsened sequentially for Tiger Singapore at $6.7m, attributed to low yields, and Tiger Australia at $17.8m, attributed to low utilisation. Average ticket price improved 22% y-o-y. However, this was still insufficient as overall unit cost rose 15.9% mainly due to high fuel costs and low utilisation at Tiger Australia. Tiger recorded an additional $1.1m in provisions, on top of the $7m provision for doubtful debts from SEAir. It is unclear if this was due to receivables from the same unit. Tiger will be lowering its capacity out of Singapore and will increase its capacity out of Sydney in July. While this is aimed at taking advantage of Scoot’s feeder traffic, it is worth noting that Tiger Australia has never been profitable since operating in Nov-07. Maintain SELL. – UOB-Kay Hian (21 May)

Genting Singapore PLC
Price – $1.53
Target – $1.61

Normalised EBITDA for RWS has been on a downward trend since 4Q10. 12 months trailing normalised EBITDA was $1.36b, compared with $1.5b in 2Q10-1Q11. VIP volumes for Singapore market were flat y-o-y in 1Q12, in line with quarterly average since 3Q10. While mass revenues were up 14% y-o-y, we expect this to slow to 5-7% y-o-y growth over coming quarters. RWS has been more aggressive in winning business: normalised EBITDA margin was 45% in 1Q12, compared to 50% in 2Q11/3Q11 when gaming volumes were similar. We estimate gross receivables increased to $960m at end 1Q12, which based on 12 months trailing VIP revenues implies a collection cycle of 180 days; this compares with 100 days as at 1Q11. When combined with upward pressure on commissions and lack of growth, the Singapore VIP business model has yet to find a comfort zone. Singapore VIP is not a cosy duopoly, but is subject to global competition – whether in Las Vegas or Sydney, casinos are targeting VIP growth from Asia, especially China. Maintain NEUTRAL. – UBS Investment (19 May)

Delfi  -- -- --   
Business: A leading regional player in branded consumer confectionery products. [FY18 Geographical] Indonesia (72.3%), regional (27.7%).

Insight: Feb-19, FY18 revenue rose 12% to US$427m on growth... Read More
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

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