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Investors’ Corner (Nam Cheong, ST Engg, OSIM Int’l, Genting S’pore)
Investors' Corner | 03 April 2014
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By: Shane Goh
Articles (99) Profile

Nam Cheong
Price – $0.33
Target – $0.48

Nam Cheong has sold 2 vessels for US$43.1m. We expect both vessels to be delivered in the next 3 months, which will boost 1Q14 figures. Its order book is maintained at a strong RM1.4b. Nam Cheong now only has 10 vessels left unsold in its 2014 delivery programme, with two-thirds of current-year stock already sold in 1Q14. Additionally, 8 out of 35 of its 2015 vessels have been sold as well. In early Mar-14, Petronas warned that offshore support vessel (OSV) charter rates are falling in Malaysia which prompted fears of peaking rates in the country. We think that the fears are misplaced. Vessel owners will likely hold back on build-to-order contracts, but should they secure charters, they will then turn to build-to-stock players like Nam Cheong for ready supply. Moreover, the company is actively developing new markets and new customers and should be able to clear its entire stock of vessels. Maintain BUY. DMG & Partners (1 Apr)

Singapore Technologies Engineering
Price – $3.82
Target – $4.30

Singapore Technologies Engineering (ST Engg) has been generating a larger share of profits from its US operations, where dividends are subject to 30% withholding tax. This is the main reason ST Engg reduced dividend payout from 90% to 80%; it does not reflect weaker operating performance. The lower payout ratio means that ST Engg can plough back more capital into new businesses. Given its track record of high returns on capital (29% return-on-equity in FY13), ST Engg should be able to generate superior growth over the medium term. ST Engg offers strong earnings visibility supported by a $13b record order book, steady earnings (compound annual growth rate of 6% in the near-term) and 4% dividend yield. Maintain BUY. DBS Vickers (1 Apr)

OSIM International
Price – $2.59
Target – $2.87

OSIM International has achieved amazing results for 5 years of record profit and 20 consecutive quarters of bottom line growth after returning to profitability in 1Q09. OSIM has maintained its profitability traction with a more efficient cost control and operations management, a strong product pipeline, tighter control of channel distributions and strong branding. OSIM has strong brand equity in the Asia region and continues to drive revenue growth with both new product launches and competitive positioning with better product mix to capture a wider target audience. OSIM focuses its operations in 5 markets: Singapore, Malaysia, Taiwan, Hong Kong and China, with China being its largest market. China recently has unveiled its urbanisation plan to drive economic growth, aiming to enable 60% of her population to enjoy urbanised city living by 2020. This means that OSIM’s target group, the mid-to-high end income group, will expand considerably. The massage chair penetration rate is currently low in China, thus the potential growth for OSIM is promising. Furthermore, the expansion plans for TWG Tea across Asia could further propel earnings growth. Initiate ACCUMULATE. Phillip Securities (31 Mar)

Genting Singapore
Price – $1.32
Target – $1.81

All the conditions precedent for Genting Singapore’s joint venture (JV) with Landing International to develop and operate a US$2.2b integrated resort (IR) on Jeju Island have been met in order for the deal to move forward. The JV will be the second foreign-owned IR project in Korea, and a similar endorsement by the Korean government could be a catalyst for Genting’s share price which has remained flat since announcing the JV on 7 Feb-14. In comparison, Landing’s share price has risen 24%. The next milestone would be for work to start in Jun-14 and the JV to spend at least US$300m in capital expenditure, marking the first phase of the project before receiving the casino license. The Jeju JV is a prelude to the full potential of Genting’s balance sheet, which is expected to be fully unlocked if it does secure a concession in Japan as well. Maintain ADD. CIMB Securities (28 Mar)

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.

Nam Cheong  -- -- --   
Business: An offshore marine group specialising in the building of offshore support vessels. [FY18 Turnover] Shipbuilding (59.2%), vessel chartering (40.8%).

Insight: May-19, 1Q19 revenue jumped multiple times to RM29... Read More
Singapore Technologies Engineering  3.890 -0.03 -0.77%   
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
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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