Excerpts from latest analyst reports:
Blended Average Selling Prices (ASP) in 2Q09 was continuously under pressure due to lower sales of its high-end products. Along with lower-than-expected volume growth, we expect stagnant sales for Synear Food in 2Q09.
In addition, the further easing of material costs and product mix downgrade offsetting each other resulted in flat gross margin in 2Q09. Operating margin expansion was unlikely in 2Q09 as utilisation rate for Synear’s existing three plants remained low. As such, we expect Synear to report another 30-40% yoy earnings decline in 2Q09.
Maintain HOLD on Synear Food: Although a meaningful turnaround might only take place from 4Q09 onwards, Synear appears to be reasonably valued as it is trading at a 40% discount to Singapore- and Hong Kong-listed F&B counters.
Synear’s strong brand name, nationwide distribution channel and leadership position also support its long-term growth potential. MaintainHOLD on Synear with a fair price of S$0.27, based on 10x 2010 PE. Our entry price is S$0.21.
Morgan Stanley says NOL valuation is expensive, target price $1.35.
Downgrade NOL to Underweight from Equal-weight: We believe NOL is well positioned to weather the container shipping downturn thanks to a strong balance sheet (post rights issue) and experienced management team.
Conversely, we believe that current valuations atabove historical means and higher-than-industry average P/BV of 1.0x 2010E are factored into near term positives for the stock. We believe that 2H09-2010 earnings could disappoint as container shipping fundamentals remain extremely challenging.
Where we differ: Our 2009-10 earnings estimates are below than consensus expectations as we believe that the market is underestimating the magnitude of the deterioration in freight rates and the extent of losses for 2009-10.
Fundamentals for the container shipping industry remain challenging, in our view, owing to a significant oversupply of ships and laid-up fleet capacity.
Stock Price
AEM Holdings (AWX) 2.460 0.090 (3.80%) Best World (CGN) 2.450 -0.010 (-0.41%) Boustead Singapore (F9D) 0.955 0.010 (1.06%) Broadway Ind (B69) 0.130 -0.003 (-2.26%) China Aviation Oil (S) (G92) 0.920 0.000 (0.00%) China Sunsine (QES) 0.420 0.000 (0.00%) ComfortDelGro (C52) 1.480 0.000 (0.00%) Delfi Limited (P34) 0.900 0.005 (0.56%) Food Empire (F03) 1.300 0.040 (3.17%) Fortress Minerals (OAJ) 0.310 0.010 (3.33%) Geo Energy Res (RE4) 0.305 0.000 (0.00%) Hong Leong Finance (S41) 2.530 0.030 (1.20%) Hongkong Land (USD) (H78) 3.140 0.000 (0.00%) InnoTek (M14) 0.555 0.005 (0.91%) ISDN Holdings (I07) 0.310 0.005 (1.64%) ISOTeam (5WF) 0.044 0.000 (0.00%) IX Biopharma (42C) 0.042 0.000 (0.00%) KSH Holdings (ER0) 0.250 0.000 (0.00%) Leader Env (LS9) 0.047 0.000 (0.00%) Ley Choon (Q0X) 0.045 0.000 (0.00%) Marco Polo Marine (5LY) 0.070 0.003 (4.48%) Mermaid Maritime (DU4) 0.142 0.003 (2.16%) Nordic Group (MR7) 0.315 0.010 (3.28%) Oxley Holdings (5UX) 0.087 -0.001 (-1.14%) REX International (5WH) 0.132 -0.001 (-0.75%) Riverstone (AP4) 0.820 0.025 (3.14%) Southern Alliance Mining (QNS) 0.430 0.000 (0.00%) Straco Corp. (S85) 0.485 0.000 (0.00%) Sunpower Group (5GD) 0.210 0.000 (0.00%) The Trendlines (42T) 0.063 -0.004 (-5.97%) Totm Technologies (42F) 0.022 0.000 (0.00%) Uni-Asia Group (CHJ) 0.820 0.000 (0.00%) Wilmar Intl (F34) 3.340 -0.130 (-3.75%) Yangzijiang Shipbldg (BS6) 1.720 -0.020 (-1.15%)
