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Investors’ Corner (Libra Group, Tiger Airways, Keppel Land, 800 Super)
Investors' Corner | 18 September 2014
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By: Jonathan Khoh
Articles (26) Profile

Libra Group
Price – $0.16
Target – $0.31

With a turnaround in place after its major restructuring in 2013 and the return of founder Chu Sau Ben at the helm, we expect FY14 to be the inflection point followed by an explosive 3-year revenue and net PAT CAGR of 68% and 232% respectively in FY13-16F, fuelled by aggressive contract wins from the mechanical and electrical engineering segment as well as more growth from its new building and construction solutions business. In addition, cost-cutting from the restructuring of the team and an increase in productivity/margins ought to fuel its net PAT growth. During our meeting with management, Libra said it is keen to reward shareholders with stable dividends in proportion to its growth. The company has so far paid out a $0.005 interim dividend and we expect it to pay another $0.01 this year, bringing FY14’s dividend yield to 10.2%. Going forward, we continue to expect dividend yields of 15.8% and 24.5% for FY15 and FY16 respectively. We derive our TP from a FY14F P/E of 6.1x which represents a 50% discount to its local peers’ average. We initiate coverage with a BUY call. DMG & Partners (15 Sep)

Keppel Land
Price – $3.44
Target – $4.09

Keppel Land (KPLD) began sales for its 500-unit condominium project, Highline Residences, near Tiong Bahru MRT. To recap, KPLD purchased this 99-year government land sales site at Kim Tian Road for $550.3m ($1.2k psf gross floor area) in Apr-13. The tender attracted 11 bidders and KPLD’s bid was 7.2% above the second highest. Due to site regulations, including varying maximum building heights, construction costs are likely to be higher than usual and we estimate KPLD’s breakeven price at roughly $1.7k psf, which points to a high single-digit profit margin for the group. We continue to see value in KPLD shares at these levels and like the group for its diversified exposure across property segments and geographical regions, and firm balance sheet. Possible catalyst ahead could be the divestment of Marina Bay Financial Centre Tower 3, which would likely lead to a potential bumper special dividend over FY14/15. Maintain BUY. OCBC Investment (12 Sep)

Tiger Airways Holdings
Price – $0.42
Target – $0.50

Tiger Airways Holdings’ (Tigerair) Singapore’s August passenger traffic growth was muted for another month, but load factors remained high. Tigerair Taiwan is expected to start operations on 26 Sep-14, with the launch of daily round-trip flights from Taiwan-Singapore. We believe the worst is nearly over for Tigerair as it rationalises its capacity and offloads loss-making associates, which should improve profitability. In addition, we maintain that it would make strategic sense for Tigerair to be privatised by Singapore Airlines (SIA) and merge with Scoot in the longer term in order to realise greater synergies. The appointment of the new CEO, Lee Lik Hsin, who had a 20-year career at SIA, should help align the 2 carriers’ interests. We see limited downside and expect Tigerair to emerge as 1 of the strongest Asian low-cost carriers in the longer term. Maintain OVERWEIGHT. JP Morgan (12 Sep)

800 Super Holdings
Price – $0.37
Target – $0.67

800 Super Holdings has a recession-proof business model providing non-cyclical essential services. Its 2 core business segments of waste management and public cleaning each operate in an oligopoly with high barriers to entry. Double digit CAGR in revenue (13.4%) and profit after tax and minority interest (PATMI) (14.6%) were recorded over the last 4 financial years, outpacing 5% CAGR for total waste generated. 3 new contracts had been not fully booked into the FY14 results reported but FY15F is forecasted to see strong revenue and PATMI y-o-y growth from the impact of the new contracts. The business is deeply undervalued by the market due to information inefficiency and poor understanding of this unglamorous business. Issue BUY. Phillip Securities (9 Sep)

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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Libra Group  -- -- --   
Business: Principally engaged in the provision of integrated mechanical & electrical engineering (M&E) services as a sub-contractor. [FY18 Turnover] M&E (43.8%), building & construction solutions (25.1%), mfg (17.5%), travel & tour svcs biz (13.6%).

Insight: Mar-19, FY18 revenue rose 54.9% due to higher reve... Read More

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