CIMB upgrades Technics Oil & Gas (5CQ.SG) to Buy from Hold, raises its target to $1.08 from $0.89 on 10x CY12 P/E (a 20% premium above downstream engineering firms’ 5-year average) and factoring in a 10%-13% increase in earnings estimates for FY11-FY12 on higher order-win projections.
“The premium is justified thanks to Technic’s strong exposure to Vietnam’s oil & gas sector and above peers’ profitability, earnings growth as well as dividend yield.”
UOB KayHian downgrades Marco Polo Marine (5LY.SG) to Hold vs Buy, cuts target to $0.36 vs $0.53 after lowering FY11-FY12 earnings estimates by 33.5%-11.6%; expects margin pressure to persist in FY11.
UOB KayHian downgrades Marco Polo Marine (5LY.SG) to Hold vs Buy, cuts target to $0.36 vs $0.53 after lowering FY11-FY12 earnings estimates by 33.5%-11.6%; expects margin pressure to persist in FY11.
OCBC upgrades Noble Group (N21.SG) to Buy from Hold, raises target to $2.59 from $1.97; after strong 3Q10, says earnings to accelerate in FY11 as group begins to reap fruits of recent pipeline investments, earnings will remain buoyed by strong underlying fundamentals for commodities such as energy, agriculture. “The group has spent US$2.8 billion ($3.6 billion) expanding its pipeline since 2007 and several of these investments are nearing maturity, adding a further boost to earnings from 4Q10 onwards.” Notes, Noble has reaffirmed target of US$1 billion earnings over next 3 years, implying 24% CAGR FY09-FY13; house raises FY10, FY11 earnings estimates by 25%, 12% respectively. Adds “with its strong balance sheet, the group remains well-positioned to capture any investment opportunities that may arise.” Notes key risks include longer-than-expected gestation periods for investments, continued USD/SGD weakness, which could lead to translation losses. Shares +0.5% at $2.09.
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Deutsche Bank upgrades Cosco (F83.SG) to Buy from Hold, lifts target price to $2.25 from $1.77 after raising FY11-12 earnings estimates by 7%-14%, says Dow Jones.
Changes reflect 9% upgrade in new annual order assumptions for FY11-12.
Expects margins to increase in coming years given improving execution. Notes completion time for typical 57,000-deadweight ton bulk carrier now 16 months vs 18 months in 2009, with management expecting further reduction to 14 months by end-2010, 12 months by end-2011.
Says Cosco well-positioned to benefit from Chinese government support for shipbuilders in form of financing measures. Shares +1.6% at $1.88.
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Morgan Stanley downgrades Indofood Agri Resources (5JS.SG) to Equalweight from Overweight, cuts target price to $2.30 from $2.60, says Dow Jones.
Morgan Stanley says changes reflect reduction in FY10-FY12 earnings estimates by average 16% to reflect weaker-than-expected production outlook this year, higher costs, lower profits from branded cooking oil business.
Research house adds, valuations look full. Tips rebound in CPO price and production volumes, plus sustained decline in cost of capital as catalysts for stock.
Shares +0.4% at $2.34.
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CIMB cuts AusGroup (5GJ.SG) target price to $0.40 from $0.47, based on 8.5x FY11 P/E, after reducing FY11-12 earnings estimates by 12%-19% to factor in lower gross margin, higher operating expenditure assumptions, according to Dow Jones.
CIMB says margins in fiscal 4Q10 ended June disappointing due to loss of construction contract. Expects order flows to remain weak, improve only from fiscal 2H11.
Research house keeps Underperform call, citing limited catalysts near term. AusGroup provides construction services to companies involved in development of natural resources. Shares off 1.0% at $0.48.
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Daiwa cuts Indofood Agri Resources (5JS.SG) target price to $2.31 from $2.59 after reducing FY10-11 earnings estimates by 18.6%-16.4% to reflect lower cooking oil margins, says Dow Jones.
Daiwa notes management’s warning of weaker margin for cooking oil in 3Q10 due to 5% price cut at end June. Keeps Hold call: “While we are bullish about the palm-oil sector, our main concern is IFAR’s relative valuation compared with those of its peers.”
Research house notes FY10, FY11 P/Es at 33.0%, 28.5% premium over other Singapore-listed palm plays; “the current premium is a hit high, especially considering the potential FY10 earnings risk.” Shares off 3.7% at $2.36.
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Citigroup lifts CSE Global (544.SG) target price to $1.35 from $0.90, based on 11x forward P/E, after increasing 2010-2011 earnings estimates by 10–20%, says Dow Jones. Keeps Buy call.
Research house says industrial systems integrator for oil & gas sector highly leveraged to oil & gas production cycle.
CIMB in an Aug 2 research report says: “1Q11 net profit slipped 20.7% y-o-y to $38.2 million, 13% below our forecast (22% of our FY2011 estimate) and consensus estimate due to higher-than-expected operating expenses. To incorporate this, we have cut our FY2011-2013 earnings estimates by 7-12%.
CIMB in a July 8 research report says: “We spoke to management about the impact of the Europe slowdown on 1) sales, 2) forex risks and 3) rising production costs in China. We have cut our earnings estimates by 7-19% after accounting for lower sales in Europe and higher production costs.
CIMB has cut HTL International (H64.SG) target price to $0.73 from $1.10, based on 6x FY11 P/E vs 8x previously, to reflect FX risks given sofa maker’s exposure to EUR, according to Dow Jones.
CIMB has also lowered FY10-11 earnings estimates by 7%-19% to assume lower sales in Europe, higher production costs. Notes HTL derives more than 65% of sales from Europe, but exposure to EUR lower at about 20%-25% as most European customers billed in USD.
UBS has upgraded Mandarin Oriental (M04.SG) to Buy from Neutral, raises target price to US$1.82 ($2.53) from US$1.35 after increasing FY10-FY11 earnings estimates by 25%-21%, says Dow Jones.
UBS says changes reflect strong rebound in Hong Kong’s business conditions, tourist-arrivals, hotel demand. Notes hotel group’s guidance for revenue per available room in 1H 2011 to rise 30%-40% on-year, driven by increased occupancy.
Expects revenue for HK this year to reach close to 2008 levels, representing growth of over 30%. Shares not traded, last closed at US$1.49.
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Macquarie has raised Sembcorp Marine (S51.SG) target price to $5.20 from $4.80, based on 16x P/E, after increasing FY11-12 earnings estimates by 50% to assume higher order wins, says Dow Jones.
CIMB has downgraded Wilmar (F34.SG) to Neutral from Outperform, cutting target price to $6.50 vs $7.85 following reduction in FY10-12 earnings estimates by 3%-4%, lowering of valuation multiple to 16x P/E vs 19x to assume weaker margins for plantation group’s palm, laurics products.
JPMorgan has cut Hyflux (600.SG) sum-of-parts target price to $3.60 from $4.20 after reducing earnings estimates for FY10 by 6%, for FY11 by 11%, for FY12 by 5% to reflect delay in revenue contributions from Libya, where company plans to build two desalination plants but hasn’t finalised details.
DMG has raised MobileOne (B2F.SG) target price to $2.55 from $2.30, based on discounted cashflow valuation, after increasing FY10-11 earnings estimates by 3%-4% to reflect improved revenue outlook.
