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Investors’ Corner (Genting S’pore, Sarine Tech, Suntec REIT, Keppel Corp)
Investors' Corner | 30 April 2014
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By: Shane Goh
Articles (99) Profile

Genting Singapore
Price – $1.36
Target – $1.24
Marina Bay Sands (MBS) reported a 10% y-o-y increase in 1Q14 EBITDA to US$435.2m, underpinned by a VIP win rate of 3.4% which was 90 basis points higher y-o-y. More ominously, VIP volume in US dollar terms plunged 29% y-o-y while mass market gross gaming revenue (GGR) eased 47 basis points y-o-y. Assuming Resorts World Sentosa (RWS) commands a 51% VIP volume share, we can expect Genting Singapore to report 1Q14 VIP volume contraction of 19% y-o-y to approximately $17b. Furthermore, we note that MBS’ 1Q14 rebate rate of 1.4% of VIP volume was its all-time high. If RWS commands a 45% mass market GGR, we estimate its 1Q14 mass market GGR would fall 7% y-o-y to about $430m. That said, this would be a welcome change compared to 4Q13’s $370m, which we estimate was an all-time low due to low mass market win rates. Maintain SELL. MayBank Kim Eng (25 Apr)

Sarine Technologies
Price – $2.87
Target – $3.20
Sarine Technologies has a near monopolistic position in the rough diamond planning and manufacturing equipment market where it estimates that it currently holds about 75% market share. With its Galaxy systems, Sarine dominates the middle segment of the diamond value chain. The Galaxy family of equipment has transformed Sarine’s proposition to its customers from not just being a capital expenditure provider but being part of their operating expenditure as well. Recurring revenues have reached over 30% of FY13’s total revenue and we project it to be about half of Sarine’s revenue by 2016. This will consequently lift their overall gross profit margins to approximately 75% by 2016. Sarine has recently introduced 2 other potentially game-changing products designed for the downstream segment of the diamond value chain, the polished diamond sector. The reasons we like Sarine include a debt free net cash balance sheet, potential growth story and unique technological advantage. Initiate ACCUMULATE. Phillip Securities (25 Apr)

Suntec REIT
Price – $1.74
Target – $1.85
Suntec REIT posted a strong recovery in its 1Q14 results, with net property income and distributable income rising 42.7% and 7% y-o-y to $43.8m and $50.9m respectively. The increase was mainly due to the opening of Suntec City Phase 1 and a $1.9m contribution from its recent acquisition in Sydney. Suntec continued to make significant progress on its lease management. Within the office segment, over 100,000 sqf of leases due to expire in 2014 was renewed, leaving only 9.6% of office space due for expiry for the rest of the year. Notably, average secured rents at Suntec City office continued to trend upwards to reach $8.97 per sqf per month (4Q13: $8.65). On its capital management, we note that it has also signed an $800m 5-year unsecured loan facility to refinance the outstanding balance of its $1.1b loan facility due in 2014 and 2015. Together with the recent private placement to pre-pay its $350m debt due in 2015, Suntec no longer has any refinancing needs till 2016. Maintain BUY. OCBC Investment (25 Apr)

Keppel Corporation
Price – $10.63
Target – $13.20
Keppel Corporation’s Baku Shipyard has secured a US$378m contract from BP Exploration (Shah Deniz) to design and build a subsea construction vessel, scheduled for delivery in Apr-17. The vessel is the first major contract secured by the shipyard since its inauguration in Sep-13. We believe that by having 2 yards in Azerbaijan, Keppel will be ahead of its competitors in bids for any contracts in the Caspian region requiring local content elements. Other Asian yards may miss the opportunities due to the lack of presence and yard proximity. In its 1Q14 results briefing, management noted strong enquiries from the Caspian market and the firm is in discussion for more contracts. We like Keppel for its ahead-of-the-curve strategy, strong track record and margins versus peers. Keppel is our top pick in the large cap offshore and marine sector. Recommend ADD. CIMB Securities (24 Apr)

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

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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
Sarine Technologies  0.270 -- --   
Business: Co manufactures & sells precision technology products for the processing of diamonds & gemstones. [FY18 Geographical] India (66.5%), Africa (12%), others (10%), Israel (5.8%), Europe (3.9%) and North America (1.8%).

Insight: May-19, 1Q19 revenue decreased by US$5.7m to US$10... Read More
Suntec REIT  1.930 -- --   
Business: Real Estate Invs Trust. Ppties incl Suntec Office Towers, Suntec City Mall & Park Mall. [FY18 Turnover] Office (46.8%), Retail (34%), Others (Ad space, car park income , convention & exhibits) (19.2%).

Insight: Jan-19, FY18 gross revenue rose 2.6% to $363.5m du... Read More
Keppel Corp  6.080 -0.02 -0.33%   
Business: [FY18 Turnover] Infrastructure (44.1%), offshore & marine (O&M) (31.4%), property (22.5%), investments (2%).

Insight: Apr-19, 1Q19 revenue rose 4.1% underpinned by high... Read More

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