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Top 5 Analyst Calls For The Week
In the Spotlight | 22 August 2014
By: Jonathan Khoh
Articles (26) Profile

Oxley Holdings (Target Price:$0.91) BUY

  • Oxley has chalked up over $700 million of surplus for its Singapore development projects, which will be recognized over the next 2-3 years. In addition, we expect its first hospitality project, The PINEs, to generate a surplus of $380 million and a recurring income stream of $35 million upon completion.
  • Since last year, Oxley has amassed an overseas portfolio of 13 prime sites in Malaysia, the UK, China and Cambodia. It has launched two projects, Royal Wharf in the UK and The Bridge in Cambodia, achieving $1 billion of pre-sales to be booked over the next 2-3 years. The sustained momentum in upcoming launches could extend earnings visibility into FY18 and beyond.
  • We value Oxley using a reappraised net asset value (RNAV) method to derive a fair value of $3.32billion, or $1.14 per share. Our valuation is premised on a summation of Oxley’s current net asset value, and the valuation surplus accruing from its local and overseas projects. We apply a 20 percent discount to our RNAV to derive a TP of $0.91.

By: OSK-DMG

ComfortDelGro (Target Price:$2.95) BUY

  • ComfortDelGro’s (CD) increasingly balanced business model (~50:50 EBIT from domestic :foreign) combined with growth drivers in both worlds (positive policy changes in domestic business and organic/inorganic growth in foreign business) makes it one of the most diversified stocks to own in Singapore.
  • CD robust $75.7 million profit (+10 percent y-o-y) in 2Q14 results, 8 percent ahead of estimates, driven by a much stronger than estimated top-line growth. Overseas business contributed 51 percent to EBIT in 2Q14 (despite much lower 41 percent of revenues) vs 47 percent in 2Q13. This is driven by higher margins in the UK and Australia. Interim DPS was increased to 3.75cents/share from 3cents/share in 2Q13. MER’s full year estimate is 7.5cents.
  • Recent ‘bus policy changes’ positive impact from Oct 2016: CD’s Singapore bus business (which contributes 19 percent to total group revenues) will see a huge uplift in EBIT margins starting Oct 2016 (from current 1.7 percent to ~10 percent), thus boosting group profits and compressing multiples, in MER’s view. Extra cash from bus asset sales could lead to robust special dividends as well as larger ticket acquisitions overseas in MER’s view.

By: MacQuarie Research

Boustead (Target Price:$2.40) BUY

  • Boustead’s Ebitda, Ebit, and operating PBT before exceptional items and associates grew 33.7 percent, 33.6 percent and 29.5 percent for the quarter, despite revenue declining 1.7 percent. Main drag on revenue was competition in the design and build space, we have flagged this threat before, but the on-going strategy to build up the industrial real estate portfolio will mitigate this.
  • Industrial real estate portfolio expansion plus steady growth from Geospatial continue to power improved core profitability as growth from their high margin recurring income business models make an impact on the overall P&L.
  • Geospatial’s earnings could outperform in the quarters ahead as Indonesia’s usage is gathering steam as the National Spatial Data Infrastructure is rolled out – with the recent Presidential Election concluded, we are hopeful that Jokowi’s infrastructure friendly policies get pushed through, in which case we could see increased usage of Geospatial as it gets used for infrastructure planning.

By: Phillip Securities

Centurion (Target Price:$0.91) BUY

  • Centurion’s low cost base and location-specific advantages will allow the Group to weather near term pressures from new supply in the Singapore workers’ dormitory segment. Overseas ventures are good diversification and student accommodation business is a solid long-term bet.
  • We have trimmed FY14F/15F to account for non-operating expenses and lowered target price as we clipped rental growth assumptions to 0-1 percent from 3-4 percent in our valuation. Notwithstanding these changes,
  • Centurion still offers strong earnings growth in excess of 40 percent over these two years and the stock currently offers 50 percent upside to our target price of $0.91.

By: DBS Vickers

Nam Cheong (Target Price:$0.55) BUY

  • Nam Cheong Limited announced this morning that it has clinched sale contracts for four vessels under its build-to-stock model worth an aggregate ~US$90m. Its current order book consists of 29 vessels worth ~MYR2b.
  • The vessels sold consist of one 5,000 DWT PSV to Bumi Armada, one 6,000 BHP AHTS to a new customer based in Vietnam, one 5,000 BHP AHTS to Time Marine Services Sdn Bhd, and one 200-men Accommodation Work Vessel (AWV) to its newly formed JV with Marco Polo Marine. All the four vessels are equipped with DP2.
  • Meanwhile, in a separate announcement, Nam Cheong also said that it has entered into a JV and collaboration agreement with Marco Polo Marine to jointly co-operate and collaborate in the investment, funding, ownership and operation of vessels. Nam Cheong will acquire a 50% stake in the JV for a total consideration of US$2m. The AWV sold by Nam Cheong to the new JV has already secured a long-term firmed five-year bareboat contact with an estimated value in excess of US$27m.

By: OCBC 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.

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