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Investors’ Corner (Ezion, SIA, Golden Agri-Resources, RH Petrogas)
Investors' Corner | 22 January 2015
Related stocks:
5ME
C6L
E5H
T13
By:

Ezion Holdings
Price – $1.18
Target – $1.55

Ezion is seeing more enquiries for its liftboats and service rigs as oil companies shift their focus from spending on new oilfields to repairing and maintaining their existing production platforms in view of lower oil prices. It is very encouraging that the company has thus far been able to secure new contracts for its refurbished service rigs at the same or higher charter rates. Ezion is one of our top stock picks in the Singapore oilfield services sector. Since the company is positioned in shallow-water production and is able to deliver earnings growth amid lower oil prices, we believe investors will return to its stocks. Its key risk is competition but potential competitors have generally turned cautious on capital expenditure. Maintain BUY but we lower our target price from $2.00. – UOB-Kay Hian (16 Jan)

Singapore Airlines
Price – $12.48
Target – $12.50

For the month of Dec-14, Singapore Airlines’ passenger traffic grew ahead of seasonality but came in weaker than Cathay’s. Going forward, management will adjust its capacity to better match market demand accordingly and continue its promotional activities in relevant markets in view of the competitive and challenging operating environment. We expect the industry demand-supply growth to improve in 2015, driving the sector and SIA’s earnings recovery. From February, Scoot will be increasing the frequency of its Singapore-Perth route as Tiger Airways Holdings redeploys its aircraft to other markets. The 2 airlines have deepened their co-operation by offering joint venture services on 2 routes flown in parallel; Singapore-Hong Kong and Bangkok. Key downside risks include deterioration in the macro-environment, rising fuel prices, worse-than-expected competition from low cost and Middle Eastern carriers, value-destroying M&A, higher-than-expected associate losses and a weaker Singapore dollar. Stay OVERWEIGHT. – JP Morgan (15 Jan)

Golden Agri-Resources
Price – $0.46
Target – $0.48

The company’s plantation upstream operation remains as the main earnings contributor to Golden Agri-Resources. We expect a 3-year CAGR of 4.4% on the back of moderate fresh fruit brunches production growth of 4% to 6%, supported by its mature age profile. Going forward, production growth is unlikely to exhibit the double-digit growth it achieved a few years back even though it has recovered from a marginal contraction of 5.3% y-o-y in 2013 due to the slowdown in new plantings since 2010 and the fact that most of its oil palm trees have reached their prime age. Its 4Q14 production will be weaker than usual. Although it is seasonally a stronger quarter, production might slow down as a result of the dry weather. Nevertheless, it is on track to meet our expectations of 7% to 10% for 2014. Maintain HOLD. – UOB-Kay Hian (14 Jan)

RH Petrogas
Price – $0.38
Target – $0.40

RH Petrogas has received a final approval for its overall development plan on the Yong Ping oil field in the Fuyu-1 PSC block to commence the first phase of development in Oct-14. This allows for production of an estimated 7.2 million barrels of oil and leaving 26.9 million barrels awaiting for phase 2 approval. The company believes that approval for phase 2 could be forthcoming in the next 2 to 3 years. The company’s partner, CNPC, has signed an oil sales agreement at an estimated 15% discount to Brent. While the company is growing its production at the Fuyu-1 block, it will also need other assets to replace production, which may cease at Basin and Island PSCs if their licences are not extended. We believe that the company will be looking out for possible minor acquisitions in the market place to boost its portfolio. The Chinese block is a likely one-off opportunity for RH Petrogas as conventional onshore licences in China have been harder to come by. Southeast Asia will most likely remain RH Petrogas’ main area of focus. Initiate NEUTRAL.– Credit Suisse (14 Jan)

Ezion Hldgs  -- -- --   
Business: Co develops, owns, and charters offshore assets to support the offshore energy markets. [FY17 Turnover] Liftboats (49.7%), Jack-up Rigs (39.5%), Offshore Support Logistic Services (10.8%).

Insight: Aug-18, 1H18, Co returned to the black with a net ... Read More
Singapore Airlines  9.240 +0.14 +1.54%   
Business: Co provides air transportation services to destinations spanning a network spread over 6 continents. [FY19 Turnover] SIA (80%), Budget Aviation (10.5%), SilkAir (6.2%), SIAEC (3.1%), others (0.2%).

Insight: May-19, FY19 revenue edged up 3.3% to $16.3b. Pass... Read More
Golden Agri-Resources  0.245 -- --   
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
RH Petrogas  -- -- --   
Business: Exploration, devt & pdtn of oil & gas resources.

Insight: May-19, 1Q19 revenue fell 28.3% to US$13.2m due to... Read More


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