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Investors’ Corner (CapitaLand Mall Trust, First Resources, Sheng Siong Group, Tiger Airways Hldgs)
Investors' Corner | 30 July 2015
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By: Joey Ho
Articles (30) Profile

CapitaLand Mall Trust
Price – $2.14
Target – $2.21

CapitaLand Mall Trust’s (CMT) 2Q15 results met our expectations. Gross revenue slipped 2.9% y-o-y largely due to a fall in income from IMM following ongoing phase 2 of asset enhancement initiative (AEI) and lower occupancy from JCube and Clarke Quay. For 1H15, CMT’s gross revenue was down marginally by 0.6% to $329m, forming 47.9% of our FY15 forecast. Distribution per unit rose 2.5% to 5.39 cents and constituted 48.4% of our full-year estimate. Although CMT’s shopper traffic and tenants’ sales per square foot grew 3.4% and 2.9% y-o-y in 1H15, respectively, rental reversions moderated to 4.6%, highlighting the tough leasing environment amid the soft economic outlook and competitive pressures. Looking ahead, the continued repositioning of the tenancy mix at JCube, AEI works at IMM and backfilling of vacancies at Clarke Quay may exert further pressure on CMT’s occupancy rate in our view. Although we are keeping our forecasts unchanged for now, we remain cautious on downside risks to our projections. Maintain HOLD. OCBC Investment (23 Jul)

First Resources
Price – $2.19
Target – $2.40

While fresh fruit bunch (FFB) production grew above our expectation in 1H15, we are maintaining the growth assumption of 10% for FY15. Growth in 2H15 will be affected by the higher base in 2H14. The commissioning of a new mill saw a significant increase in First Resources’ (FR) third-party fruit intake and we believe that there would be more of such purchases in 2H15 to increase the utilisation rate of the new mill. On 1 Jul-15, FR made a pledge for sustainable development. Therefore, it is likely to see slower new planting from now onwards, in line with the management’s guidance. We are positive on FR’s acquisition of plantation company PT Falcon Agri Persada that has an oil palm plantation in West Kalimantan. Even though it is just a small addition in terms of planted area to FR, the acquisition of planted areas will allow FR to sustain production growth and provide an immediate enhancement to production as 50% of the planted areas are in production age. We like FR because it is a beneficiary of Indonesia’s new export levy and biodiesel policies, and it also has a good track record of delivering better-than-industry FFB yield and oil extraction rates. Maintain BUY. UOB-Kay Hian (23 Jul)

Sheng Siong Group
Price – $0.87
Target – $0.93

Sheng Siong Group’s 2Q15 results were broadly in line with expectations. While weak local demand and increased competition from retailers offering “SG50” discounts contributed to flat same-store sales growth, sales from 5 new stores and improvements in gross margins lifted net profit by 23% y-o-y, forming 25% of our full-year forecasts. 2Q15 gross margin improved to 25.2%, driven by lower input costs from its direct purchasing initiatives and efficiency gains derived from its central distribution centre. In addition, we believe that an improvement in sales mix in favour of higher-margin fresh produce and a weaker Malaysian ringgit also helped. With operating expenses remaining stable, improvement in gross margins flowed straight to the group’s bottom line, boosting 2Q15 net margin to 7.6%. Though no new store additions were announced in 2Q15, we lift our FY16 to FY17 EPS forecasts by 3.5% to reflect higher gross margin assumptions. Maintain ADD. CIMB Securities (23 Jul)

Tiger Airways Holdings
Price – $0.33
Target – $0.42

Tiger Airways Holdings (TigerAir) reported 1Q16 numbers that were a huge improvement from last year’s with an operating profit of $0.6m from a loss of $16.4m in 1Q15. However, this was below our expectation of $9.5m operating profit mainly due to slightly lower yields and lower load factors than expected. In terms of net profit, TigerAir posted a loss of $1.7m from a loss of $65.2m a year ago, due to better operating performance while last year’s numbers also included $35.3m in losses from associates and $14.6m relating to shut-down costs of Mandala Airlines. 2Q16 will be seasonally weak for TigerAir but we expect a much stronger second half as fuel costs will be much lower. TigerAir has hedged about 40% of its fuel requirements for the next 15 months at US$87 per barrel compared to the current price of US$70 per barrel and our assumption of US$90 per barrel. Maintain BUY. DBS Vickers (22 Jul)

Equipped with a bachelor in banking and finance, Joey covers the finance, technology and healthcare industry in Singapore.

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CapitaLand Mall Trust  2.600 -0.03 -1.14%   
Business: Co owns and invests in quality income-producing assets which are used, or predominantly used, for retail purposes primarily in Singapore.

Insight: Apr-19, 1Q19 gross revenue and NPI rose 10% and 11... Read More
First Resources  1.540 -0.030 -1.91%   
Business: Co engages in the cultivation and maintenance of oil palm plantations. [FY18 Turnover] Refinery and processing (95.5%), plantations & palm oil mill (4.5%).

Insight: Feb-19, FY18 revenue dipped 2.1% due to lower aver... Read More
Sheng Siong Group  1.160 -- --   
Business: Co is a supermarket chain operator.

Insight: Apr-19, 1Q19 revenue rose 10.1% to $251.4m mainly ... Read More

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