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Investors’ Corner (CSE Global, Golden Agri-Resources, Pacific Radiance, UOL Group)
Investors' Corner | 06 March 2014
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By: Choo Hao Xiang
Articles (151) Profile

Pacific Radiance
Price – $0.97
Target – $1.30

Pacific Radiance is more than just a vessel owner and operator. The firm also manages the construction of most of its new-builds at third-party shipyards. This enables it to lower its vessel acquisition cost, thus giving it a sustainable advantage over vessel owners that purchase their assets from trading companies. We forecast FY14F and FY15F net profits of US$67.2m and US$83.6m respectively, driven by expansion of its fleet to 79 vessels from 59 by end-2015, as well as annual gains from sales of vessels. In our view, due to Pacific Radiance’s lower vessel acquisition costs, most of the sales will give rise to gains and will be recurring, as its business model is based on an active fleet renewal strategy. We see upside potential from a bigger vessel acquisition pipeline. We value the stock based on a 12 times FY14F P/E, between the 13.9 times average P/E for small/mid-capitalisation peers in cabotage-protected markets and the global peer average of 11.3 times. Initiate BUY.
– DMG & Partners (4 Mar)

CSE Global
Price – $0.63
Target – $0.64

FY13 core net profit was $30.4m, representing 64% of our forecast. The lower figure recorded was due to additional provisions of $8.1m made for a telecom project in Saudi Arabia which has been delayed to 3Q14. Excluding the provision, CSE’s FY13 gross margin would have been 28.8% (FY12: 24.9%). The higher margin was a result of more offshore projects in the US. With no large greenfield projects clinched in FY13, CSE secured orders for $362.7m, taking the order book for the continuing operations to $227.2m at end-13. We expect the orders to rebound to $450m in FY14, with strength springing from thermal engineering jobs in China, offshore work in the US and a sizeable telecom job in Africa. At 8 times FY15F P/E, its mean for the past 2 years, we believe that CSE is fairly valued. Maintain HOLD.
– CIMB Securities (3 Mar)

Golden Agri-Resources
Price – $0.555
Target – $0.52

Going forward, Golden Agri-Resources (GAR) remains largely positive about its prospects, supported by robust demand for edible oils, substitute and alternative uses. Barring unforeseen weather conditions, GAR believes that crude palm oil (CPO) production should revert to the usual 5% to 10% growth. However, it notes that its China agri-business’ operating environment remains challenging in view of the intense competition. This year, GAR intends to spend US$250m for upstream activities, which include expanding palm oil plantations by 20k to 30k hectares. For downstream, it projects a capital expenditure of US$300m to increase processing capacity and acquire vessels. We opt to increase our FY14 estimates by 2% to 3%. We are also increasing our CPO forecast for 2014 from US$830 per tonne to US$835. Based on an unchanged 13.5 times peg against our new FY14F EPS, our fair value improves slightly from $0.50 to $0.52. Maintain HOLD.
– OCBC Investment (3 Mar)

UOL Group
Price – $6.12
Target – $6.95

FY13 core net profit cumulates to $344.2m, which makes up 100% of our full year forecast and is slightly below consensus. UOL sold 578 and 88 residential units in Singapore and China, respectively, in FY13 with a total sales value of more than $552m. Earlier this year, the group launched Riverbank@Fernvale and its sales performance was moderate. Previously launched 435-unit Thomson Three is about 78% sold with average selling prices (ASPs) of $1,300 per square foot and Seventy St. Patrick’s (186 units) is to be launched in 2Q14. Given domestic residential uncertainties, UOL will replenish land bank on a very selective basis and continue to deploy capital into growing its recurring income businesses. The pre-commitment level at One KM, slated for opening in Sep-2014, is now about 80%. We reduced fair value estimate to $6.95, versus $7.16 previously, mostly due to lower valuations of listed holdings and softer ASPs in our model. Maintain BUY.
– OCBC Investment (3 Mar)

Haoxiang manages and oversees the portfolio of stocks in the consumer goods and hospitality sectors at Shares Investment.

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Pacific Radiance  -- -- --   
Business: Co is a provider of offshore support solutions with a fleet of more than 130 vessels. [FY17 Turnover] Offshore support services business (62.4%), subsea business (27.8%), complementary business (9.8%).

Insight: Nov-18, 9M18 revenue fell 5.7% to US$45.9m mainly ... Read More
CSE Global  0.470 +0.005 +1.08%   
Business: A global technologies company offering cost-effective, totally integrated solutions to industries various sectors. [FY16 Geographical] The Americas (63.4%), Asia-Pacific (34.3%), Europe/Middle East/Africa (2.3%).

Insight: Feb-19, FY18 revenue increased by a moderate 4%, m... Read More
Golden Agri-Resources  0.245 -- --   
Business: Co is engaged in cultivating & harvesting oil palm trees, processing fresh fruit bunches (FFB) into crude palm oil (CPO) & palm kernel (PK), & refining CPO into industrial & consumer pdts.

Insight: May-19, 1Q19 revenue fell 11% due to softer crude ... Read More
UOL Group  7.470 +0.09 +1.22%   
Business: Co engages in property development, property investments, and hotel businesses. [FY17 Turnover] Ppty devt (52.2%), hotel ops (23.6%), ppty invs (14.9%), invs & others (9.3%).

Insight: Aug-18, 1H18 revenue jumped 72.9% to $1.3b attribu... Read More

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