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Investors’ Corner (Noble Group, CWT, Ho Bee Investment, Biosensors International Group)
Investors' Corner | 16 August 2013
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By: Wilfred Ng
Articles (6) Profile

Price – $1.43
Target – $1.68
CWT reported a decent set of 2Q13 results that were in-line with our expectations. Revenue jumped 66% y-o-y to $1.7b, driven by higher contribution from its newly established commodity business. However, the group incurred higher administrative expenses and higher financing costs. Consequently, net profit eased 6% y-o-y to $18.1m for 2Q13. The group also announced a new leadership team – headed by Adam Slater and Alan Kuek – at its commodity business. With the changes, CWT expects to streamline its operations, enabling greater control over the trading business. CWT’s logistics capacity expansion is proceeding on track with the construction of Cold Hub and Toh Guan Road East being 60% and 40% completed. However, its recent management reshuffle led to the lowering of our sum of the parts valuation of $1.68 (from previously $2.08). Maintain BUY. OCBC Investment (13 Aug)

Ho Bee Investment
Price – $2.19
Target – $2.66

Ho Bee’s 2Q13 core earnings was below expectations with development profit dried up, as its inventory at Sentosa Cove remained largely unsold. Ho Bee’s 1H13 headline profit may be $78.4m, but core earnings are estimated at a mere $3.8m but the recurrent income is expected to improve with the completion of the Metropolis. Ho Bee’s Australian landbank now totals nearly 1.1m square feet in gross floor area from 4 sites with expectation of earnings contributions to begin only from FY17F onwards as profits can only be recognised upon full completion.  With a stronger recurrent income base over the horizon, and the fact that Ho Bee can bide its time with its Sentosa Cove units, we believe that the stock remains attractive. Maintain BUY.Maybank Kim Eng (13 Aug)

Noble Group
Price – $0.92
Target – $0.85
Noble’s 2Q13 results were weaker than expected, with profit after tax and minority interest tumbling 68% y-o-y to US$63m. This was due to weakness in the agri segment, which saw back-to-back losses following a 1Q13 loss. Noble’s earnings are expected to stay subdued on continued weakness in the agri segment, such as the weak sugar prices which eroded Noble’s margins as it is selling at a level near cost. We see some bright spots in the company’s new oilseed crushing plants in Ukraine, South Africa and Brazil, which are expected to be ready by 4Q13. Notably, the energy segment continued to report strong performance, on the back of robust performance from energy coal and continued expansion in the oil and gas division. Downgrade to NEUTRAL. – DMG & Partners Research (13 Aug)

Biosensors International Group
Price – $0.975
Target – $1.09

Biosensors’ 1Q14 results came in below expectations on revenue decline due to lower sales to China distributors and gross margin decline. With price cuts in various provinces in China going underway, we expect a greater impact on gross profit margins to be felt going forward. We expect Spectrum Dynamics to be bottom line neutral in the first year. We believe contribution will continue to be small and will be insignificant for the next 2 years. In addition, interest expense was higher at US$3.4m, due to the impact from the 4-year 4.875% $300m fixed rate notes raised in 4Q13. The higher interest cost will contribute to lower net margins. The margin pressure causes us to cut FY14F and FY15F earnings by 33% and 17% respectively. Downgrade to HOLD. DBS Vickers (12 Aug)

Ho Bee Land  2.270 -0.02 -0.87%   
Business: Invests in & develops real estate properties in Singapore. [FY18 Turnover] Rental income (91.3%), sale of development properties (8.7%).

Insight: Apr-19, 1Q19 revenue rose 7.7% due to increased re... Read More

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