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Investors’ Corner (Japan Foods Hldg, Olam Int’l, Yoma Strategic, City Developments)
Investors' Corner | 24 December 2014
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By:

Japan Foods Holding
Price – $0.62
Target – $0.61

1H15 net profit dropped by 52% to $1.8m, mainly due to the rising labour cost as well as some one-off expenses as a part of the group’s effort to retain its existing labour force. The company added 5 new restaurants, increasing its total count to 44 as at 30 Sep-14. In the long term, management envisions an increase in the number of outlets under its 3 major restaurant brands to 20 each. We believe the company’s Singapore operation continues to be a game of optimisation rather than expansion. We continue to like its proactive cost management, such as setting up the central kitchen as well as a self-ordering iPad E-menu system at all its restaurants. We foresee that China could become a more significant contributor to the company’s bottomline in future, given the huge size of the market and the fact that its JV has the exclusive rights to the “Menya Musashi” brand over there. We expect a gradual increase in profit from the JV till FY17 as the company gradually opens more outlets in China. Maintain HOLD. CIMB Securities (18 Dec)

Olam International
Price – $1.98
Target – $2.35

Olam International’s recent US$1.5b acquisition of McCleskey Mills and Archer Daniels Midland Company’s (ADM) cocoa business will strengthen its presence and market positioning in the areas deemed to be prioritised platforms – peanuts (from the acquisition of McCleskey Mills, the third-largest US peanut sheller) and cocoa (from the acquisition of ADM, one of the world’s largest processors and suppliers of cocoa). The acquisition of ADM will enhance Olam’s presence in the global cocoa value chain and strengthen its position as a top-3 player. Management mentioned that Olam is unlikely to undertake any further substantial acquisitions in FY15 after these 2 transactions. We may see higher earnings volatility in the coming 1 to 2 quarters due to the sharp decline in crude oil prices and the historic fall in commodity prices as the US dollar strengthens. Maintain HOLD. UOB-Kay Hian (17 Dec)

Yoma Strategic Holdings
Price – $0.62
Target – $0.82

The Asian Development Bank (ADB) has approved a loan of up to US$100m in 2 tranches of US$50m each to Yoma Strategic Holdings with the aim of improving infrastructure for boosting connectivity in Myanmar. This additional source of funding comes in very handy for Yoma’s development in many areas which are supportive of the company’s growth and development. The funds would enable Yoma to utilise its own resources for other ventures such as the iconic Landmark, consumer goods (KFC outlets) and services (private schools) as well as the further development of Star City. Overall, this is positive in strengthening Yoma’s balance sheet although the actual impact will depend on the timing of drawdowns to support the intended projects. Maintain BUY. DBS Vickers (17 Dec)

City Developments
Price – $9.96
Target – $10.05

City Developments (CIT) has announced the $1.5b divestment of Quayside Collection, an integrated project in Sentosa Cove, to a newly created investment platform created in partnership with Blackstone’s Tactical Opportunities Fund and CIMB Bank. CIT will gain $330m from the divestment and receive recurring income from its 37.5% stake. We expect CIT to redeploy the divestment proceeds into higher-yielding overseas geographies, including the UK, Japan and Australia. As the mainstream Singapore-listed developer with the largest exposure to the Singapore residential market, residential cooling measures will be a key overhang on the company’s stock in our view. However, in the long term, the group’s focus on overseas markets should serve to diversify the group’s concentration away from Singapore. Maintain NEUTRAL. JP Morgan (16 Dec)

Japan Foods Hldg  -- -- --   
Business: Co engaged in the op of restaurants under various brands in S'pore & M'sia.

Insight: May-19, FY19 revenue inched up 0.3% due to a net i... Read More
Olam Int'l  1.820 -- --   
Business: Co is engaged in sourcing, processing, packaging and merchandising agricultural products. [FY18 Turnover] Food staples & packaged foods (47.6%), confectionery & beverage ingredients (23.4%), industrial raw materials, infrastructure & logistics (14.9%), edible nuts & spices (14.1%).

Insight: May-19, 1Q19 revenue rose 16.7% due to increased t... Read More
Yoma Strategic Hldgs  0.335 -0.005 -1.47%   
Business: Co operates mainly in Myanmar under several business segments. [FY18 Turnover] Automobile (40.5%), real estate (20.8%), real estate services (18.4%), consumer (12.9%), financial services (6.2%), investments & others (1.2%).

Insight: Feb-19, 3Q19 revenue jumped 12.1% to $27m mainly a... Read More
City Developments  9.790 -0.08 -0.81%   
Business: Co is an international property & hotel conglomerate. [FY18 Turnover] Property development (48.4%), hotel operations (39.8%), rental properties (8.5%), others (3.3%).

Insight: May-19, 1Q19 decreased 29.5% to $746.2m compared t... Read More


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