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Investors’ Corner (Raffles Medical Group, Ezion Hldgs, Hutchison Port Hldgs Trust, Global Logistic Properties)
Investors' Corner | 23 September 2015
Related stocks:
5ME
By: Tan Jia Hui
Articles (82) Profile

Raffles Medical Group
Price – $4.72
Target – $4.73

The recent proposed acquisition of a stake in International SOS (ISOS) is said to allow Raffles Medical Group (RMG) to manage 10 of ISOS’ clinics, located in China, Vietnam and Cambodia. Coupled with the recent opening of its first clinic in Japan, Osaka, we look positively on the group taking measured steps to gain a foothold in these new markets, to grow organically over the long-term. Management reiterated that both RMG and its joint venture partner remain keen to finalise plans for its proposed Shenzhen hospital development. We expect that the 6 ISOS clinic together with RMG’s plans to open one clinic a year in Shanghai, will be instrumental in feeding patient referrals to its hospitals when they open. Despite observing a slowdown in regional foreign patients owing to the weakening of domestic currencies, overall patient volume is expected to remain resilient. We believe its current valuations fully capture the potential upside. Maintain HOLD. Daiwa Securities Capital Markets (18 Sep)

Ezion Holdings
Price – $0.69
Target – $0.98

We noted investors’ concern over the impact of low oil prices on charter rates. Ezion Holding’s chief executive officer, Thiam Keng Chew, reassured investors by highlighting that low oil prices have yet to impact charter rates. Charter renewals have been at the same or higher rates and vessels have no issue getting extensions of contracts, indicating demand for liftboats. Lower utilisation was mainly due to damages on some vessel during operation and additional capital expenditure requested by customers. To cater to customers’ demand to upgrade vessels to add on tonnage/accommodation capacity, Ezion has decided to interchange rigs between customers, leading to additional downtime. Utilisation for services rigs delivered fell to 75% as 6 out of 25 units were undergoing repair and upgrade works. The 62% drop in share price in the past 12 months seems to have factor in the worst-case scenario and seems cheap on all valuation metrics. Maintain BUY. CLSA (17 Sep)

Hutchison Port Holdings Trust
Price – US$0.58
Target – US$0.62

The rising competitiveness of Chinese ports, particularly those in the Pearl River Delta region, suggests Hong Kong (HK) ports will eventually lose out. While concession for HK ports will expire in 2047, the accelerating downtrend in throughput might trigger earlier-than-expected redevelopment of Kwai Tsing’s land into residential usage. Hutchison Port Holdings Trust (HPHT) currently holds 137.6 hectares of land in Kwai Tsing. Assuming that half that area would be developed into residential buildings, total net asset value will reach HK$34b, HK$38b, and HK$45b in our bear, base and bull case scenarios, respectively. Taking a 20% discount we estimate the HPHT’s Kwai Tsing land to be worth US$0.4 to US$0.53 per share. While long-term trend for HK ports looks unpromising, the redevelopment potential for Kwai Tsing’s land should not be overlooked as it not only underpin share price, but could also lead to privatisation of HPHT ahead. Maintain BUY. Deutsche Bank (17 Sep)

Global Logistic Properties
Price – $2.06
Target – $3.30

Leasing risks are present in half of Global Logistic Properties’ (GLP) China portfolio according to our estimates. Aside from retail sales of daily-use items, food, garment, footwear and e-commerce, all composites (which account for circa half of GLP’s portfolio) are either slowing down or contracting. Our China economist recently downgraded 2015E gross domestic product growth to 6.9%, with 2016E at 6.8%. Despite its resilience, domestic consumption has moderated in line with the overall economy. Consumption drives 80% of GLP’s business; hence we are downgrading growth in development starts. However, oversupply risks are overblown as our analysis of 10 cities (59% of GLP’s portfolio) suggests that vacancies remain tight in tier-1 cities, with risk in selected lower tier cities. The stock remains undervalued at a 35% discount to revalued net asset value and 0.75 times P/BV. Maintain OVERWEIGHT. JP Morgan (15 Sep)

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.

Ezion Hldgs  0.044 -0.001 -2.22%   
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
Hutchison Port Hldgs Trust US  0.250 -- --   
Business: Co invests in, develops, operates and manages deep-water container ports in the Pearl River Delta.

Insight: Feb-18, FY18 revenue dipped 0.6% as combined conta... Read More


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