Olam announced earlier this month that it was raising $740 million through a placement of new shares with an eye on future acquisitions.
Kim Eng said it views the equity-raising exercise negatively because of the high discount offered, which could be dilutive to minority shareholders.
However, the brokerage said the share price correction was overdone and it sees a good entry opportunity. Olam management is likely to have identified attractive investment targets and is building up a huge warchest, Kim Eng said.
Wednesday, June 29, 2011
Kossan BUY Target Price RM3.71 by AmResearch
Maintain hold at RM3.14 with revised fair value RM3.71: We are maintaining our 'hold' rating on Kossan with a lower fair value of RM3.71, post a downward earnings adjustment and the rolling forward of our valuation base year from FY11F to FY12F. We continue to peg our valuation to a price-earnings ratio of 10 times FY12F earnings ' at a 30% discount to its 10-year mean.
Following a recent company visit, we have trimmed our FY11F/13F earnings per share by -7% to -9% after incorporating lower margin assumptions due to further normalisation in margins (1QFY11: -1 percentage point quarter-on-quarter [q-o-q]). We now forecast an earnings before interest, tax, depreciation and amortisation (Ebitda) margin of 16% for FY11F, against 18% previously.
Following a recent company visit, we have trimmed our FY11F/13F earnings per share by -7% to -9% after incorporating lower margin assumptions due to further normalisation in margins (1QFY11: -1 percentage point quarter-on-quarter [q-o-q]). We now forecast an earnings before interest, tax, depreciation and amortisation (Ebitda) margin of 16% for FY11F, against 18% previously.
Thursday, June 23, 2011
AirAsia Outperform Target Price RM4.10 by CIMB Equities Research
CIMB Equities Research said AirAsia announced a widely-expected order for 200 A320neo aircraft at the Paris Air Show on Thursday, June 23 for delivery starting 2016.
“The orders are a positive development as the aircraft will be 15% more fuel efficient than the existing A320,” it said on Friday.
CIMB Research said AirAsia will not overstretch its balance sheet as its Thai and Indonesian associates should be able to take these planes in their own names post listing and AirAsia has the option to dispose of the older model.
The new planes are also needed to grow its Philippines and future Vietnam operations.
“We maintain our forecasts, RM4.20 target price (9x P/E) and OUTPERFORM rating as AirAsia’s low operating costs and strong demand put it in the best position to ride out high oil prices and global overcapacity. A potential catalyst is the listing of its two associates,” it said.
“The orders are a positive development as the aircraft will be 15% more fuel efficient than the existing A320,” it said on Friday.
CIMB Research said AirAsia will not overstretch its balance sheet as its Thai and Indonesian associates should be able to take these planes in their own names post listing and AirAsia has the option to dispose of the older model.
The new planes are also needed to grow its Philippines and future Vietnam operations.
“We maintain our forecasts, RM4.20 target price (9x P/E) and OUTPERFORM rating as AirAsia’s low operating costs and strong demand put it in the best position to ride out high oil prices and global overcapacity. A potential catalyst is the listing of its two associates,” it said.
Hamilton Hotel Seoul South Korea
Hamilton Hotel, Seoul, South Korea - Republic of Korea Hamilton Hotel Seoul in the middle of Itaewon
Keppel Corp BUY Target Price $14.60 by Credit Suisse
Credit Suisse has raised its target price on Singapore’s Keppel Corp (KPLM.SI), the world’s largest oil rig builder, to $14.60 from $14.18 and maintained its outperform rating.
Keppel has secured $7.1 billion of orders year-to-date and has options for additional rigs worth $2.5 billion, Credit Suisse said, adding that it has raised its 2011 order forecast to S$10 billion from $8 billion.
Credit Suisse said that it believes there will be a high conversion rate of jack-up rig options into firm contracts, driven by a shift towards more complex wells as well as a need for established drillers to regain market share.
The brokerage added that Keppel is well-positioned to win orders from Brazilian oil company Petrobras’ tender for 21 rigs due to the Singapore firm’s established operations in Brazil, strong execution capabilities and relationship with Petrobras.
Keppel has secured $7.1 billion of orders year-to-date and has options for additional rigs worth $2.5 billion, Credit Suisse said, adding that it has raised its 2011 order forecast to S$10 billion from $8 billion.
Credit Suisse said that it believes there will be a high conversion rate of jack-up rig options into firm contracts, driven by a shift towards more complex wells as well as a need for established drillers to regain market share.
The brokerage added that Keppel is well-positioned to win orders from Brazilian oil company Petrobras’ tender for 21 rigs due to the Singapore firm’s established operations in Brazil, strong execution capabilities and relationship with Petrobras.
Berjaya Toto BUY Target Price RM5.10 by RHB
Upgraded to outperform at RM4.28 with revised fair value of RM5.10 (from RM4.50): In a surprise move, BToto last Saturday launched a new game called 4D Jackpot, which is a combination of a 4D game and a jackpot game, a very similar game to Magnum's 4D Jackpot, which has been performing extremely well since its launch in September 2009. This brings the total number of games BToto has to seven from six. BToto's 4D Jackpot game has five prize categories, with a minimum win of RM2 million for the first prize and RM100,000 for the second prize. The theoretical prize payout ratio (PPR) is 55%, same as its other lotto games.
Of the 55% prize pool, 55% (plus the upfront RM2 million and any snowballed amount) goes to the first prize, while 10% (plus any snowballed amount) goes to the second prize. As such, the actual payout for the first prize would be 30.25% and for the second prize 5.5%. We estimate the odds for the first prize are one in 16.67 million and for the second prize, one in 1.67 million, which is the same as Magnum's 4D Jackpot game. This game also has a cascading feature where if the Jackpot 1 prize is not won and the jackpot amount is RM30 million and above, then the Jackpot 1 prize money of any amount exceeding RM20 million shall cascade and be added to the Jackpot 2 prize money for the particular draw.
We believe this is a positive development for BToto given its languishing sales ever since Magnum's new 4D jackpot game was launched. We believe this game could give Magnum a run for its money and boost BToto's sales and profit quite substantially, particularly since this is not a replacement game for any existing games but a new game entirely. As a guide, Magnum's gaming revenue rose by 9.3% year-on-year (or RM281.5 million), while gaming profit before tax (PBT) rose by 55.3% (or RM135.8 million) in FY12/10, which was largely attributed to its new 4D jackpot game. As the market is already used to the mechanics of this type of game, it should take off quite easily while any cannibalisation of its existing 4D sales is not expected to be significant, as was the case with Magnum.
As for implications on the industry, this could mean that the government is now more open to liberalising the industry, and we would not be surprised if Pan Malaysian Pools (PMP) also gets to launch a similar game soon. This would then be a game changer for whoever the new buyers of PMP are (said to be a consortium of companies including the Genting group), as valuations would have to take this possibility into account.
Risks: 1) Poor luck factor; 2) Regulatory changes for the numbers forecast operator (NFO) industry to discourage gambling in the country or to allow competitors more outlets and more game variations; and 3) Hike in gaming taxes.
Our FY04/12-13 forecasts have been raised by 2.2% to 4.9%, but FY04/11 is unchanged. Post-earnings revision, our discounted cash flow-based fair value is raised to RM5.10 (from RM4.50). We raise our recommendation on the stock to 'outperform' (from market perform), as we believe this could be a catalyst for BToto, given the exciting potential and earnings prospects of this new game. ' RHB Research, June 13
Of the 55% prize pool, 55% (plus the upfront RM2 million and any snowballed amount) goes to the first prize, while 10% (plus any snowballed amount) goes to the second prize. As such, the actual payout for the first prize would be 30.25% and for the second prize 5.5%. We estimate the odds for the first prize are one in 16.67 million and for the second prize, one in 1.67 million, which is the same as Magnum's 4D Jackpot game. This game also has a cascading feature where if the Jackpot 1 prize is not won and the jackpot amount is RM30 million and above, then the Jackpot 1 prize money of any amount exceeding RM20 million shall cascade and be added to the Jackpot 2 prize money for the particular draw.
We believe this is a positive development for BToto given its languishing sales ever since Magnum's new 4D jackpot game was launched. We believe this game could give Magnum a run for its money and boost BToto's sales and profit quite substantially, particularly since this is not a replacement game for any existing games but a new game entirely. As a guide, Magnum's gaming revenue rose by 9.3% year-on-year (or RM281.5 million), while gaming profit before tax (PBT) rose by 55.3% (or RM135.8 million) in FY12/10, which was largely attributed to its new 4D jackpot game. As the market is already used to the mechanics of this type of game, it should take off quite easily while any cannibalisation of its existing 4D sales is not expected to be significant, as was the case with Magnum.
As for implications on the industry, this could mean that the government is now more open to liberalising the industry, and we would not be surprised if Pan Malaysian Pools (PMP) also gets to launch a similar game soon. This would then be a game changer for whoever the new buyers of PMP are (said to be a consortium of companies including the Genting group), as valuations would have to take this possibility into account.
Risks: 1) Poor luck factor; 2) Regulatory changes for the numbers forecast operator (NFO) industry to discourage gambling in the country or to allow competitors more outlets and more game variations; and 3) Hike in gaming taxes.
Our FY04/12-13 forecasts have been raised by 2.2% to 4.9%, but FY04/11 is unchanged. Post-earnings revision, our discounted cash flow-based fair value is raised to RM5.10 (from RM4.50). We raise our recommendation on the stock to 'outperform' (from market perform), as we believe this could be a catalyst for BToto, given the exciting potential and earnings prospects of this new game. ' RHB Research, June 13
Monday, June 6, 2011
Capitaland BUY Target Price $4.14 by Kim Eng Research
Kim Eng Research in a June 3 research report says: "A consortium comprising CapitaMalls Asia (CMA), CapitaMall Trust (CMT) and CapitaLand has secured a White Site at Boon Lay Way for $969 million, or $1,012 psf ppr.
"CapitaLand will lend its expertise on the office component while CMA will lead the design for the retail portion. With this acquisition, the CapitaLand group of companies will have a strong foothold in Jurong Gateway, right in the commercial heart of the Jurong Lake District.
"While the targeted 6% yield on cost for the JG site is attractive, the actual impact on CapitaLand's RNAV is minimal. The asset, when completed, is likely to be eventually monetised and sold to CMT and CCT. We have trimmed our target price to $4.14, pegged at par to RNAV after adjusting for the share prices of the listed subsidiaries. MAINTAIN BUY."
"CapitaLand will lend its expertise on the office component while CMA will lead the design for the retail portion. With this acquisition, the CapitaLand group of companies will have a strong foothold in Jurong Gateway, right in the commercial heart of the Jurong Lake District.
"While the targeted 6% yield on cost for the JG site is attractive, the actual impact on CapitaLand's RNAV is minimal. The asset, when completed, is likely to be eventually monetised and sold to CMT and CCT. We have trimmed our target price to $4.14, pegged at par to RNAV after adjusting for the share prices of the listed subsidiaries. MAINTAIN BUY."
Global Logistic Properties BUY Target Price $2.71 by UBS
UBS Investment Research in a May 31 research report says: "Global Logistic Properties (GLP) reported Q4FY11 earnings of US$49.2 million. Stripping out US$11 million revaluation loss, headline profit was 13.5% higher y-o-y at US$59.8 million, in line with consensus but below UBS estimates.
"The shortfall was due primarily to higher withholding taxes in Japan, 2.4% weakening of the Yen against the US$ in Q4FY11, and a US$6.4 million foreign exchange loss on Yen-denominated loans. We fine-tune our model to reflect the higher lease ratios in China and update our forex assumptions.
"On average, we raise our FY2012-2014 earnings estimates by 5.5%. Valuations remain attractive at 1.1x P/B. Price target of $2.71 based on 1x our sum-of-the-parts RNAV estimates. BUY".
"The shortfall was due primarily to higher withholding taxes in Japan, 2.4% weakening of the Yen against the US$ in Q4FY11, and a US$6.4 million foreign exchange loss on Yen-denominated loans. We fine-tune our model to reflect the higher lease ratios in China and update our forex assumptions.
"On average, we raise our FY2012-2014 earnings estimates by 5.5%. Valuations remain attractive at 1.1x P/B. Price target of $2.71 based on 1x our sum-of-the-parts RNAV estimates. BUY".
Banyan Tree Hangzhou Summer Nights
Sunday, June 5, 2011
MMCCorp BUY Target Price RM3.70 by HwangDBS
Buy at RM2.81 with revised target price of RM3.70 (from RM4.05): MMC reported 1QFY11 headline net profit of RM43 million (-56% quarter-on-quarter; +25% year-on-year) which was below our and consensus estimates. Earnings were dragged down by larger losses at Zelan Bhd of RM53 million against RM30 million loss in 1QFY10.
Operationally, the key divisions did well, as reflected in the 7% y-o-y earnings before interest tax (Ebit) growth to RM627 million. 1QFY11 transport and logistics Ebit jumped 27% y-o-y driven by its port business.
Pelabuhan Tanjung Pelapas Bhd's (PTP) throughput rose 18% to 1.8 million TEU, while Johor Port's conventional cargo volume and container volume rose 15% and 3% y-o-y. For its energy and utilities division, the overall higher dispatch factor for Malakoff Corp Bhd of 51% in 1QFY11 (against 49% in 1QFY10) and 6% y-o-y higher volume for Gas Malaysia Sdn Bhd drove 1QFY11 Ebit up 22% y-o-y.
We reduce our FY11 to FY13F profit by between 11% and 17% to prudently reflect continued losses at Zelan, where we factor in liquidated ascertained damages or provisions for its projects in Indonesia and Abu Dhabi.
We also take into account the recent unfavourable price structure for Gas Malaysia, whose spreads will narrow to RM2.04 to RM2.08 per mmbtu against RM3.95 previously. However, the impact will be offset by higher volume growth and strong TEU growth for PTP.
We recommend a 'buy' with a lower target price of RM3.70. We drop our target price after factoring in lower discounted cash flow value for Gas Malaysia.
While the news on Gas Malaysia might throw off valuations for a potential listing, there are other catalysts to look forward to. These are: (i) the expansion of 2,100MW Tanjung Bin coal-fired plant by 1000MW, with MMC being one of two parties short-listed. A decision will be made in 3QCY11; (ii) the RM50 billion mass rapid transit project, we use conservative assumptions in our sum-of-parts valuation; and (iii) higher values for its land in Johor. '
Operationally, the key divisions did well, as reflected in the 7% y-o-y earnings before interest tax (Ebit) growth to RM627 million. 1QFY11 transport and logistics Ebit jumped 27% y-o-y driven by its port business.
Pelabuhan Tanjung Pelapas Bhd's (PTP) throughput rose 18% to 1.8 million TEU, while Johor Port's conventional cargo volume and container volume rose 15% and 3% y-o-y. For its energy and utilities division, the overall higher dispatch factor for Malakoff Corp Bhd of 51% in 1QFY11 (against 49% in 1QFY10) and 6% y-o-y higher volume for Gas Malaysia Sdn Bhd drove 1QFY11 Ebit up 22% y-o-y.
We reduce our FY11 to FY13F profit by between 11% and 17% to prudently reflect continued losses at Zelan, where we factor in liquidated ascertained damages or provisions for its projects in Indonesia and Abu Dhabi.
We also take into account the recent unfavourable price structure for Gas Malaysia, whose spreads will narrow to RM2.04 to RM2.08 per mmbtu against RM3.95 previously. However, the impact will be offset by higher volume growth and strong TEU growth for PTP.
We recommend a 'buy' with a lower target price of RM3.70. We drop our target price after factoring in lower discounted cash flow value for Gas Malaysia.
While the news on Gas Malaysia might throw off valuations for a potential listing, there are other catalysts to look forward to. These are: (i) the expansion of 2,100MW Tanjung Bin coal-fired plant by 1000MW, with MMC being one of two parties short-listed. A decision will be made in 3QCY11; (ii) the RM50 billion mass rapid transit project, we use conservative assumptions in our sum-of-parts valuation; and (iii) higher values for its land in Johor. '
Subscribe to:
Posts (Atom)