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Top 5 Analysts’ Calls For The Week
In the Spotlight | 04 July 2014
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5WJ
By: Jonathan Khoh
Articles (26) Profile

Cordlife Group (Target Price:$1.50) BUY

  • Expanding to growth markets. Having developed a strong presence in mature markets like Singapore and Hong Kong, where the industry penetration rate is 22 percent, Cordlife is expanding into the India, Indonesia and Philippine markets, where the penetration rates are 0.1-0.2 percent.  It also has exposure in Malaysia and China through investments in Stemlife (STEM MK, NR) and China Cord Blood Corp (CO US, NR), respectively.
  • Vast potential for strong earnings growth. We expect earnings to reach a 60 percent CAGR during FY14F-16F, aided by: i) the ramp-up in high margin cord tissue storage service business. ii) rapid growth in three burgeoning markets.
  • Recurring revenue. Cordlife‟s 21-year deferred payment scheme for its cord blood/tissue storage services translates into a stream of recurring revenue. Customers also have an option to have the cord blood/tissue stored for life after the expiry of their contracts. We remain optimistic that most existing customers may potentially extend their contracts.

BY:OSK-DMG

Keppel Corp (Target Price: $12.45) BUY

  • Keppel has signed a conditional contract with Golar LNG (GLNG US, NR) to perform the world’s first conversion of an existing Moss liquefied natural gas (LNG) carrier, the Hilli, into a floating liquefaction vessel (FLNGV). We expect this conversion to be worth $750 million, according to media sources.
  • Golar LNG successfully priced its follow-on offering of 110 million shares of common stock at US$54.00/share, raising US$6 billion to: i) fully fund initial milestone payments under a conditional agreement with Keppel, and ii) partly fund future scheduled payments. With financing now in place, the lights have turned green for the converting of two additional vessels – the Gimi and the Gandria, which appear to be sister vessels to the Hilli into FLNGVs.
  • Golar LNG is a repeat customer. Keppel has successfully worked on three floating storage regasification units (FSRUs) for Golar LNG in the past, making it a repeat customer for floating natural gas vessels. This gives us confidence that the next two units might go to Keppel as well.

BY:OSK-DMG

MoneyMax Financial Services (Target Price:$0.365) Neutral

  • MoneyMax announced on 20 June 2014 that it would invest RM15.63 million through its subsidiary, Cash Online Sdn Bhd, for a 51 percent stake to grow and expand a network of pawnshops in Malaysia. Partnering with Mr. Chong Mei Sang, a veteran with over 30 years of experience, MoneyMax targets to expand its outlets to 34 over the next few years in various parts of Malaysia, mostly in Johor.
  • Malaysia will have a bigger pool of potential customers as well as larger workforce to tap on. Malaysian’s pawnbroking industry is generally fragmented (lack of major competitors), with many pawnshops operating in traditional style. 2 percent interest rate per month is allowed to be charged on pawnshop loans, higher than the 1.5 percent interest rate cap per month in Singapore.
  • We expect the Malaysian operations to make positive contributions to its bottom line from FY16F onwards. Typically it takes up to 2 years for a new pawnshop to build up a sizeable loan balance to breakeven. However, more clarity in earning visibility from the Malaysian operations is needed.

BY: Phillip Securities Research

United Envirotech (Target Price:$1.50) HOLD

  • United Envirotech (UEL) has just been awarded a RM45 million EPC contract in Johor Bahru, Johor, Malaysia to construct a sewer pipeline and a sewage treatment plant by end 2015. While the award of this sizable contract is noteworthy, we believe that the market is probably keener on UEL’s prospects in China’s waste-water treatment industry.
  • The Chinese government is expected to pass a CNY2 trillion (US$320 billion) water pollution action plan into legalization soon. We expect the move to benefit players with established track record like UEL.
  • In view of the positive development, we bump up our FY15 and FY16 earnings forecasts by 1.5-2.8 percent. We are also rolling forward our 28x PEG to blended FY15/FY16F EPS, thus raising our fair value to $1.50 from $1.30. But the recent run-up may have captured most of the good news in its share price, hence we maintain our HOLD rating.

BY:OCBC Research 

Frasers Centrepoint Trust (Target Price:$1.845) BUY 

  • Successful placement underscores investor optimism on new acquisition. Earlier this month, Frasers Centrepoint Trust (FCT) announced that it had issued 88 million shares at $1.835/share ($161.5 million total) in a private placement to partially fund its $305 million acquisition of Changi City Point (CCP). This issuance was well subscribed, accounting for 52 percent of acquisition price, which is on the higher end of our initial assumptions of 40-45 percent, which was based on a gearing cap of 35 percent (vs 31 percent post acquisition/placement).
  • Long runway to raise profitability; CCP to propel FCT’s earnings in the years ahead. As CCP is still in its first rent cycle and 60 percent of leases are up for renewal in FY14/15, the Manager is uniquely poised to deliver earnings growth by refreshing the mall’s tenant mix to better cater to its growing catchment population.
  • Good price to enter. At current levels, FCT offers an attractive FY14-16F yield of 6.0-6.8 percent, which is higher than Singapore-focused retail S-REITs, which are trading at yields of 5.5-6.6 percent. We have marginally increased our FY14F earnings estimates to account for revised funding assumptions, no change to our TP. FCT offers investors a 24-25 percent total return for FY14/15.

BY: DBS Group Research

Driven by passion in investments, Jonathan’s research emphasizes in incorporating critical thinking with value and income investing surrounding companies listed in Singapore. Well trained in banking and finance, Jonathan has intern experience at various industry players including GIC Pte Ltd.

Please click here for more information about this author.

Cordlife Group  0.415 -0.005 -1.19%   
Business: Co is in the business of cord lining banking and holds the largest market share of private cord blood banks in Singapore, Indonesia and the Philippines.

Insight: Feb-19, 18M18 revenue increased 13% to $12.1.m mai... Read More
Keppel Corp  5.840 -0.12 -2.01%   
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
MoneyMax Financial Svcs  -- -- --   
Business: Co is a leading pawnbroker in the region. [FY18 Turnover] Retail & trading of pre-owned jewellery & watches (74.2%), pawnbroking (25.8%).

Insight: May-19, 1Q19 revenue rose 6.6% mainly due to incre... Read More
Frasers Centrepoint Trust  2.750 -0.02 -0.72%   
Business: Co is a developer-sponsored retail real estate investment trust.

Insight: Apr-19, 1H19 NPI rose 3.6% to $71.8m, as gross rev... Read More


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