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Investors’ Corner (Wilmar International, Ezion Holdings, StarHub, UOL Group)
Investors' Corner | 15 May 2014
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By: Shane Goh
Articles (99) Profile

Wilmar International
Price – $3.21
Target – $3.47

At its 1Q14 results briefing, Wilmar International revealed that soybean crush margins remain in the negative territory but believes that the situation is unsustainable and expects margins to revert back to positive territory. It is more optimistic on its refining margin prospects in 2Q14 due to higher palm oil supplies and plans to participate in Indonesia’s third biodiesel tender. It said that Indonesia is considering expanding the palm oil products range in the export tax list to encourage further downstream investment. We are slightly more positive on its palm and laurics division following the guidance of improving refining margins. However, we believe that it will take some time for the market to absorb the exceptionally high soybean supplies in China. As such, crush margins may only turn positive from 3Q14 onwards. We expect Wilmar’s higher plantation production and higher sales volume of consumer products to deliver better earnings in 2Q14. Maintain HOLD. CIMB Securities (11 May)

Ezion Holdings
Price – $2.25
Target – $2.53

Ezion Holdings’ 1Q14 net income stood at US$45.2m, down 2% y-o-y (up 11.8% q-o-q). However, stripping out preference dividend, recurring net income stood at US$43.2m, up 18% q-o-q (up 63% y-o-y). In addition, Ezion had secured a contract to bareboat charter a service rig over a 5-year period worth US$63.9m to support oil and gas activities in the Middle East. The firm also increased its shareholding in associate, Teras Conquest 1, for US$25m. Currently, only 24 out of the 34 self elevating units (SEU) contracts secured for Ezion have begun to contribute. With another 6 units starting to operate in FY14, 3 in FY15 and 1 in FY16, we expect earnings trend to rise as new units start to contribute in the coming quarters. As new assets kick in, leading to stronger operating cash flow, and a recent equity placement, gearing is expected to fall in subsequent quarters. This should allow Ezion to accept more SEU projects moving forward. Maintain ACCUMULATE. Phillip Securities (8 May)

Price – $4.17
Target – $4.98

StarHub’s q-o-q performance was steady with net profit up 1% to $84m. On a y-o-y basis, lower national broadband network adoption grants and a higher tax provision led to an 8% drop in net profit. On the positive side, mobile revenue rose 1.3% y-o-y on better postpaid contributions, fixed network revenue rose 2.2% y-o-y on stronger corporate business and stabilised international roaming, and EBITDA margin of 32.6% was above full-year guidance of 32%. StarHub tried to raise 4G premiums in mid-Apr by $2.14/month for all its tiered subscribers but this was blocked by the Infocomm Development Authority of Singapore, which ruled that existing subscribers should not be affected until their contracts expire, but new and re-contracting subscribers will still be affected. While 1Q14 did not contain any surprises, we believe positive trends such as falling handset subsidies, stabilising roaming revenue and rapid data monetisation will strengthen throughout the year. Maintain BUY. Maybank Kim Eng (8 May)

UOL Group
Price – $6.48
Target – $6.95

A one-time $44.3m divestment of its Malaysian Jalan Conley site lifted UOL Group’s 1Q14 PATMI up 69% y-o-y to $120.8m while overall revenue increased 65% y-o-y to $408.8m. Contributions from ParkRoyal on Pickering, which opened in Jan-13, pushed revenues from the hotel segment up 8% y-o-y to $107.2m. UOL indicates that the housing sector in Singapore continues to face headwinds and they would likely adopt a wait-and-see stance in terms of launching Seventy St. Patrick’s this year. Specifically, the management pointed out that a potential catalyst for stronger demand for this project could be an announcement of an MRT station in its locality. Given residential uncertainties in Singapore, management will continue to focus on growing its recurring income businesses. Maintain BUY. OCBC Investment (8 May)

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

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Wilmar Int'l  3.740 -0.06 -1.58%   
Business: Co's integrated agribusiness model encompasses the entire value chain of the agricultural commodity processing biz, from origination and processing to branding, merchandising and distribution of a wide range of agricultural pdts.

Insight: May-19, 1Q19 revenue fell 6.2% to US$10.4b driven ... Read More
Ezion Hldgs  -- -- --   
Business: Co develops, owns, and charters offshore assets to support the offshore energy markets. [FY17 Turnover] Liftboats (49.7%), Jack-up Rigs (39.5%), Offshore Support Logistic Services (10.8%).

Insight: Aug-18, 1H18, Co returned to the black with a net ... Read More
StarHub  1.320 +0.020 +1.54%   
Business: [FY18 Turnover] Mobile (34.9%), sale of equipment (22.4%), enterprise fixed (21.6%), pay TV (13.2%), broadband (7.9%).

Insight: May-19, 1Q19 total revenue rose 6% to $596.8m attr... 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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