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Investors’ Corner (Keppel Corp, Mapletree Greater China Commercial Trust, Tianjin Zhong Xin Pharmaceutical Group, ISOTeam)
Investors' Corner | 10 July 2014
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By: Tan Jia Hui
Articles (82) Profile

Keppel Corporation
Price – $10.75
Target – $12.25

Keppel Corporation’s (KEP) conditional contract with Golar Hilli Corporation worth about US$735m, to perform a floating liquefied natural gas conversion has turned effective. There are also the options for 2 more similar units which could add about US$1.4b worth of new orders if exercised. Being the world’s first-of-its-type conversion job, this reaffirms KEP’s leadership in complex offshore conversion projects. KEP also announced recently that it has secured another floating production storage and offloading conversion contract and a subsea construction vessel contract worth a total of $368m. The group has secured orders of about $3.2b year-to-date, accounting for close to half of our full-year new order win estimate. Meanwhile, the forecasted dividend yield of about 4.7% should provide support to the share price. Maintain BUY. OCBC Investment (4 Jul)

Mapletree Greater China Commercial Trust
Price – $0.87
Target – $0.98

Mapletree Greater China Commercial Trust’s (MGCCT) investment mandate includes commercial income producing real estate assets in the Greater China region. It currently owns 2 assets, Festival Walk, 1 of the most popular malls in Hong Kong and Gateway Plaza, 1 of the largest wholly‐owned Grade A office buildings in Beijing by gross floor area. We expect continued strong rental reversions as 18% and 10% of Festival Walk and Gateway Plaza leases respectively expire in FY14 and estimate that rents on expiring leases are 15‐30% lower than market rents, supported by limited new supply in both markets. MGCCT’s rare combination of high‐quality assets experiencing strong rental reversions has not been recognised by the market, as we estimate MGCCT trades at an attractive 7.4% forward yield. Initiate BUY. AmFraser Securities (3 Jul)

Tianjin Zhong Xin Pharmaceutical Group
Price – US$1.06
Target – US$1.46

Tianjin Zhong Xin Pharmaceutical Group is a primary beneficiary of China’s ageing population and sharply rising incidence rate of cardio-vascular diseases. Produced exclusively by the company, the Su Xiao Jiu Xin pill is a cardio-vascular drug that is well recognised for its fast efficacy in body and lack of side effects. Sales have been growing rapidly at 14.5% compound annual growth rate (CAGR) over the last 5 years. We think its high growth is sustainable, given the sharply rising incidence rate that correlates with China’s ageing population. The price gap between S- and A-share has been narrowing over the last 5 years (from 80% to 56% discount). The company recently proposed a private placement of 90m A-shares, at the price of Rmb12.83 (US$2.06) per share to finance the upgrading of marketing network, logistics as well as forays into other complementary businesses. Given the huge disparity in pricing, S-shares investors are entitled to the economic benefits from these investments, at only half the cost for potential subscribers of the A-share placement. Initiate ADD. CIMB Securities (2 Jul)

Price – $0.43
Target – $0.515

ISOTeam is a market leader in the repairs and redecoration (R&R) as well as addition and alteration (A&A) segments in public sector projects in Singapore. The R&R business boasts defensive, recurrent qualities as demand is inelastic, protected by legislation requiring external walls of buildings to be repainted at least once every 5 years. Additionally, huge supply completions of public and private housing units over 2014-2018 raise the demand pool for R&R. The A&A business complements the R&R segment, both riding on government initiatives including the construction of new hawker centres and expanding the network of sheltered linkways. We expect revenue to grow to $90.9m in FY16 from $48.2m in FY13 mainly led by the R&R segment (32% CAGR). ISOTeam currently has no direct peers listed on the SGX. We estimate dividends per share of $0.01 in FY14, which translates into approximately 2.3% yield. Initiate BUY. DMG & Partners (30 Jun)

Armed with a bachelor in mathematics, Jia Hui keeps close tabs on the oil & gas, and manufacturing sectors in Singapore.

Please click here for more information about this author.

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
Mapletree North Asia Commercial Trust  1.340 +0.030 +2.29%   
Business: Real estate investment trust focused on commercial assets (comprising retail & office) in HK & China.

Insight: Apr-19, FY19 revenue rose 15.1% due to higher rent... Read More
Tianjin Zhong Xin Pharmaceutical Group  0.810 -- --   
Business: Mfg of Chinese & Western pharmaceutical pdts in China.

Insight: Apr-19, 1Q19 revenue rose 8.6% to Rmb1.8b. Gross p... Read More
ISOTeam  0.225 -- --   
Business: Engaged in the building maintenance & estate upgrading industry. [FY18 Turnover] Addition & alteration works (43.2%), Repairs & redecoration works (23.6%), others (21.4%), coating & painting (11.8%).

Insight: May-19, 9M19 revenue rose 62.8% with significantly... Read More

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