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Investors’ Corner (Tiger Airways, Golden Agri-Resources, Mapletree Logistics, Petra Foods)
Investors' Corner | 16 October 2014
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By: Tan Jia Hui
Articles (82) Profile

Tiger Airways Holdings
Price – $0.40
Target – $0.16

Tiger Airways Holdings announced on 9 Oct-14 that it will make a further $93m provision for onerous lease contracts for 12 parked A320s that will commence their leases to IndiGo over the next 6 months. This is on top of the $25m provided 5 months ago for 8 parked planes, which are part of the 12 planes above. While the sublease of the 12 A320s will generate $162m in lease incomes over the next 3 to 4-year lease terms to partially offset the lease expenses and is preferable than leaving the planes idle, the size of the $93m provision suggests that the lease rates may have been lower than Tiger’s earlier expectations. Tiger said that a rights issue was possible, probably to fund the losses in Singapore and Australia, and also the negative carry on the 12 planes. We have factored into our model a 1-for-2 rights at the end of FY15 at $0.30 per share that will raise around $145m. Tiger also indicated that it will “trim its fleet by a further 2 to 4 planes if need be”. Stay REDUCE. CIMB Securities (10 Oct)

Golden Agri-Resources
Price – $0.50
Target – $0.48

Golden Agri-Resources has drifted down to our previous fair value of $0.50 after posting worse-than-expected 2Q14 earnings, such that its 1H14 core net profit only met 39% of our then full-year forecast. At current levels, some of the negative news appears to be priced in. For one, soy prices – the main reason for the drag on crude palm oil (CPO) prices – appear to be bottoming, as soy futures made a modest rebound of 3% from a 4-year low in Sep. Similarly, CPO prices have recovered some 15% from a low of RM1,914 to around RM2,195. Secondly, plantation owners may get a modest boost from the absence of export taxes on CPO – this after Malaysia scrapped the tax for both Sep and Oct, while Indonesia removed it for Oct. That said, we still see the need to reduce our FY14 CPO price assumption to US$760 a ton (FY15 to US$800 a ton), as we see reduced risk of an impactful El Nino effect on production in 2014. From a valuation perspective, we upgrade our call to HOLD. OCBC Investment (9 Oct)

Mapletree Logistics Trust
Price – $1.17
Target – $1.25

Mapletree Logistics Trust (MLT) has entered into agreements with its sponsor to purchase 2 properties, Mapletree Yangshan Bonded Logistics Park (MYBLP) in Shanghai for Rmb197.2m ($41.1m) at an initial net property income (NPI) yield of 7.5% and Mapletree Zhengzhou Logistics Park (MZLP) in Zhengzhou for Rmb205.6m ($42.8m) at an initial NPI yield of 8%. The initial yields are higher than the current portfolio yield of 6.8% for its China properties. With MYBLP strategically located in the Shanghai Pilot Free Trade Zone and close to the Yangshan Deepwater Port, MLT should benefit from rising container volumes and development of the free trade zone. Contributions from these properties will result in a 0.2%/1.3% uplift to our FY15/FY16F distribution per unit. Looking ahead, we continue to see MLT delivering stable returns of estimated 6.6%, backed by solid acquisition prospects from its sponsor. Maintain BUY. DBS Vickers (9 Oct)

Petra Foods
Price – $3.95
Target – $4.50

In our recent visits to Jakarta and Manila, we observed Petra Foods’ products continue to dominate the chocolate confectionary shelves, with a more than 50% space. Petra has a 10% market share in the Philippines but from our recent visit, we believe its Goya brand’s shelf-space in modern trade is higher than that. Since the divestment of its cocoa ingredients business in Dec-12, management has not made any moves despite sitting on an estimated US$250m war chest. We believe mergers and acquisitions and/or new strategic product categories are likely to happen once ongoing litigation with Barry Callebaut reaches certainty, as this will add scale to its consumer business and strengthen its bargaining position with retailers. Our target price implies 30.9x FY15F P/E and we believe the premium to its Indonesian peers (22.2x) is justifiable, given its excellent management track record and purer exposure. Reiterate BUY. DMG & Partners (7 Oct)

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.

Golden Agri-Resources  0.265 -0.010 -3.64%   
Business: Co is engaged in cultivating & harvesting oil palm trees, processing fresh fruit bunches (FFB) into crude palm oil (CPO) & palm kernel (PK), & refining CPO into industrial & consumer pdts.

Insight: May-19, 1Q19 revenue fell 11% due to softer crude ... Read More
Mapletree Logistics Trust  1.580 -- --   
Business: Real Estate Invs Trust. Invs in logistics ppties. [FY19 Geographical] S'pore (36.2%), HK (24.7%), Japan (13.4%), Australia (8.1%), S.Korea (6.3%), China (5.8%), Malaysia (3.8%), Vietnam (1.7%).

Insight: Apr-19, FY19 revenue rose 15% due to higher revenu... Read More
Delfi  1.300 +0.140 +12.07%   
Business: A leading regional player in branded consumer confectionery products. [FY18 Geographical] Indonesia (72.3%), regional (27.7%).

Insight: Feb-19, FY18 revenue rose 12% to US$427m on growth... Read More

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