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Investors’ Corner (Ezra Hldgs, Frasers Centrepoint, SPH REIT, ST Engrg)
Investors' Corner | 16 January 2014
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By: Shane Goh
Articles (99) Profile

Ezra Holdings
Price – $1.34
Target – $1.27

Ezra’s 1Q14 net earnings of US$6.3m was lower by 6% y-o-y despite total sales rising 22% y-o-y. This was mainly due to lower gross margins, other operating and financial income. The Subsea division remains the highest revenue contributor, with gross margin hovering around 12.5%-13% compared to 15% in 4Q13. Due to the seasonality of the Subsea division, earnings are generally stronger in the second half of the financial year. According to management, Ezra’s Subsea order book was around US$1.2b-US$1.3b as of end 1Q13, and is currently bidding for US$9b worth of Subsea contracts. Albeit this is the second consecutive quarter of profitability for the Subsea division, we still remain concern with project execution risk, and its ability to translate strong top-line to earnings growth. Maintain NEUTRAL. Phillip Securities (13 Jan)

Frasers Centrepoint
Price – $1.52
Target – $2.06

Frasers is a property developer and investor with a gross asset value of $10.5b. Its timing of the Singapore housing market has been good (mostly sold) and it made an early entry into its core overseas markets (Australia and China). Frasers exited FY13 with over $3.2b of presales yet to be recognised. We think there is considerable redevelopment or asset enhancement initiative potential for its existing Singapore commercial properties, many of which are dated and under-rented. With TCC on board and the right blend of income-producing and development assets, we believe there is considerable capacity for Frasers to expand its asset recycling/asset under management platform. The stock’s low free float is still prohibitive for large investors but we think this will change over time. We begin coverage with an ADD rating. CIMB Securities (11 Jan)

Price – $0.99
Target – $0.99

For the period from 24 Jul-13, its listing date, to 30 Nov-13, SPH REIT posted net property income of $51.4m and distributable income of $46.5m, up 1.8% and 3.2% from the respective pro forma figures for the same period last year. Distribution per unit (DPU) for the period came in at $0.0186, consistent with our projection of $0.0184. The growth was mainly attributable to higher rental rates at Paragon and stable income from Clementi Mall. Paragon achieved robust rental reversion of 12.4% during the reporting period. While Clementi Mall saw a slight negative reversion of 1.9% due to fine-tuning of its tenancy mix, leasing activities have remained strong, as evidenced by commitment of over 90% of its tenants for a second lease term. We continue to like SPH REIT for its unique exposure to the upscale and suburban retail market and healthcare services sector. SPH REIT’s keen eye for capital management has enabled it to establish a well-staggered debt profile and long weighted average term to maturity of 4.8 years. Maintain HOLD. OCBC Investment (10 Jan)

Singapore Technologies Engineering
Price – $3.88
Target – $4.56

ST Marine announced that it has secured new orders worth about $446m in 4Q13. Of more significance is that the company’s environmental business based in China was awarded a contract to design a niche Pneumatic Waste Collection System for high-rise commercial and residential projects in Guangzhou. As such, we believe its marine business focused on customised and high engineering content work is supported by a robust outlook that will last till end-2015. ST Marine also announced a week ago that it will invest in a 10% stake in a newly established cruise ferry service business, Nova Star Cruises, which operates between Yarmouth, Canada and Portland, US. The investment is aimed at providing a more stable income stream as well as downstream support to the group’s shipbuilding business, as it will bareboat charter ST Marine’s Ropax vessel for the next 3 years, with an option to extend up to 7 years. Maintain BUY. DMG & Partners (9 Jan)

Currently pursuing his Chartered Financial Analyst qualification, Shane provides coverage on the property, consumer and environmental sectors at Shares Investment.

Please click here for more information about this author.

Ezra Hldgs  -- -- --   
Business: Co is a provider of integrated offshore solutions to the oil & gas industry. [FY16 Turnover] Marine Services (68.9%), offshore support and production services (25.7%), subsea services (5.4%).

Insight: Oct-17, The US Bankruptcy Court approved the appli... Read More
Frasers Property  1.830 -0.010 -0.54%   
Business: Co operates as a real estate company. [FY18 Geographical] Australia (41.1%), Singapore (33.2%), Europe (14.1%), China (7.2%), others (4.4%).

Insight: May-19, 1H19 revenue grew 27% due to significant c... Read More
SPH REIT  1.090 -- --   
Business: S'pore-based REIT with a portfolio of assets primarily for retail purposes in Asia-Pacific.

Insight: Apr-19, 1H19 gross revenue rose 4.5% to $111.9m du... Read More
Singapore Technologies Engineering  4.290 +0.03 +0.70%   
Business: An integrated engineering group providing solutions & services across many sectors. [FY18 Turnover] Aerospace (39.5%), electronics (32%), land systems (19.1%), marine (8.6%), others (0.8%).

Insight: May-19, 1Q19 revenue rose 5.1% to $1.7b attributed... Read More

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