Dr Jason Siu, an analyst with OSK Research in Hong Kong, said in a report dated Feb 14 that Dukang Distiller Holdings 'deserves better valuation'.
The report was issued after Dukang (market cap: S$331 million) reported that 2QFY12 earnings jumped 55% year-on-year.
Dr Siu noted that Dukang (stock price 42 Singapore cents) is trading at 7.3x trailing PE and 6.0x FY13 earnings based on consensus estimates (vs. adjusted Asian peers’ average of 13.0x PE of FY13).
"If we include all China A-share peers (such as market leader, Kweichow Moutai, 600519.CH), the sector trades as high as 20.5x over the same period.
"As most Asian alcoholic beverage stocks listed overseas trades at such a huge discount to its HK/ China peers, we believe the current valuation for the counter is unjustified in light of
1) pronounced historical liquor background;
2) similar profitability level to its peers (ROIC of 20% vs. China & sector average 15.5%)."
Listed on the Singapore Exchange and Taiwn Stock Exchange (via TDRs), Dukang is largely owned by its chairman, Gao Feng (43.84%), and US hedge fund Och-Ziff Capital Mgmt (5.83%).
Recent story: DUKANG: 2Q2012 net profit up a whopping 55% at Rmb 94.4m
AmFraser Research analyst Lee Yue Jer said Technics Oil & Gas has gotten off to a great start in its new financial year.
Revenue in the first quarter was up 58% year on year to $35.3 million, while net profit was up 32% to $4.2m.
The analyst has maintained his 'Buy' call on the stock (recently at 91 cents) and $1.22 as the fair value.
In terms of dividend, he continued to expect 8 cents a share dividend this year, translating into a (8.8% yield.
Technics' outlook is positive on the back of high oil prices supporting the entire oil & gas industry, especially in rapidly-growing Vietnam where Technics is reaping the rewards of a 20+ year operating history, said the analyst.
Recent story: CHINA MINZHONG growth intact, TECHNICS OIL unlocks shareholder value
