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Top 5 Analyst Calls For The Week
In the Spotlight | 18 September 2014
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U96
5DM
By: Jonathan Khoh
Articles (26) Profile

800 Super Holdings (Target Price: $0.67) BUY

  • Double digit CAGR in Revenue (+13.4 percent) and PATMI (+14.6 percent) over the last four financial years, outpacing 5 percent CAGR for total waste generated.
  • Three new contracts not fully booked into FY14 results; 1HFY15F and Full Year FY15F forecasted to see strong Revenue and PATMI year on year growth.Currently trading cheaply at estimated implied forward P/E of only 4.4x; in contrast to core business contracts at 6 or 7 year tenures.
  • We rationalise that 8.0x P/E is a bargain price to pay for a profitable, recession proof business model, with core business revenue visibility for the next 6 to 7 years and track record of growth

By: Phillip Securities

China Merchants Holdings (Target Price:$1.32) BUY

  • China Merchants Holdings has received approval for its acquisition of Jiurui Expressway, and that its major shareholder China Merchants Group has also converted its remaining block of Redeemable Convertible Preference Shares (RCPS) into 135.78 million equity shares in the company.
  • Following these two new developments, China Merchants Group will have a 71.9 percent stake in CMHP. We believe CMHP can sustain its 7-cents annual dividend payout comfortably, post conversion/dilution.
  • Our target price of $1.32 already takes into account dilution from RCPS and convertible bonds but we have yet to update our numbers and TP for the Jiurui acquisition.

By: DBS Vickers

Innovalues (Target Price:$0.465) BUY

  • The automotive market in China and US has rebounded and been growing steadily after the global financial crisis and are expected to continue growing. Notwithstanding new customer acquisitions, a recovery in the European automotive market and the recent M&A activities conducted by its existing key customers will also add a further boost to Innovalues in the coming years.
  • Although we are conservatively expecting revenue to grow at about 7 percent over the next 3 years,its resultant earnings is expected to grow at 3 year CAGR of 38 percent  between FY13-FY16F through margin expansion.Innovalues has been progressively paying down its debt over the last 6 years, and has just turned net cash in 2Q14. Along with its strong FCF, the company is now in a position to increase dividends. We expect total dividends for FY14 to be increased to 1.7 cents (5.7% yield) vs. 1.2 cents in FY13 and FY12, and continue to grow going forward.
  • Innovalues is currently trading at 7.2x FY14F P/E with an expected CAGR of 38 percent for the next three years. Given its growth prospects, its high ROE, its transformation in sector focus, renewed balance sheet strength and higher prospective dividends, we believe it would be undemanding to value Innovalues at 10x FY15F P/E, which translates to a target price of $0.465.

By: AmFraser Research

 Sembcorp Industries (Target Price:$6.14) BUY

  • India could help to plug the gap in Singapore as a result of lower contribution from vesting contracts in FY15-16. Sembcorp Industries’ (SCI’s) increased stake from 49 to 65 percent in its first Indian power plant (TPCIL) suggests management’s confidence in its full commissioning by 2Q15.
  • Maintain Add. As TPCIL could contribute 7-13 percent to SCI’s Utilities earnings in FY15-16, we upgrade our EPS by 1-3 percent. Our SOP-based TP rises accordingly. The start-up of TPCIL’s first 660MW unit in 4Q14 could be a short-term catalyst. We believe Singapore pool prices have bottomed out, with most of the new capacities already commissioned in 1H14.
  • We forecast that TCPIL will contribute $28 million in profit in FY15, before a ramp-up to $57 million in FY16, adding 7-13 percent to Utilities’ earnings. This could plug the 5-10 percent dip in Singapore earnings since FY13. TPCIL’s 65 percent equity value to SCI (for its 65 percent stake) is $681 million or $0.38/SCI share. Further upside to our EPS and target price could spring from: 1) higher merchant rates in India; 2) the start-up of the 2nd India plant, NCCPP in FY16 and 3) higher stake in Vietnam plant.

By: CIMB Research

Ying Li International Real Estate (Target Price:$0.80) BUY

  • What’s new is that the company will be expanding into tier 1 cities with Beijing and Shanghai as potential first stops, under the deal with China Everbright Limited (CEL). We see expansion into tier 1 cities as a strategic move to position Ying Li as a national level developer.
  • While CEL will benefit from Ying Li’s development’s expertise, Ying Li will stand to gain from the former’s property management know how in a synergistic relationship. Other than cooperating on development projects, we may see both companies combining their retail properties into a REIT at a later stage.
  • Ying Li remains undervalued and that its current share price will allow investors to buy into the company at around the same price as CEL which will be subscribing to 381 million new shares at $0.26 each. On completion, Ying Li will emerge much stronger financially with gearing as low as 15 percent and about RMB1.5 billion of cash on its balance sheet. As such, we look forward to catalysts such as the announcement of new projects over the next 12 months.

By: Voyage 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.

Sembcorp Industries  2.080 -0.02 -0.95%   
Business: Primarily engaged in the production and supply of utilities services. [FY18 Turnover] Utilities (55.9%), marine (41.8%), others/corp (2.2%), urban development (0.1%).

Insight: May-19, 1Q19 revenue fell 10.1% to $2.5b due to lo... Read More
Ying Li Int'l Real Estate  0.098 -0.001 -1.01%   
Business: Property developer based in Chongqing. [FY18 Turnover] Property development (74.6%), property investment (25.4%).

Insight: May-19, 1Q19 revenue fell 53.8% to Rmb143m attribu... Read More


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