DMG takes stock of S-CHIPS after 2Q results

Analysts: Tan Han Meng CFA, CPA & Terence Wong CFA

juice_girl
Sino Grandness' beverage division is experiencing strong growth. Photo: Company

2Q results slightly below expectations. Out of our S-Chips universe that had reported their results, three (25%) came in above, four (33%) were in line and five (42%) fell below
expectations.

Those that surprised on the upside include Sino Grandness and Yangzijiang (BUY, TPS$1.62). In the current quarter, HL Asia (BUY, TPS$2.38) and Yamada had witnessed margin pressure, while Fuxing China (BUY, TPS$0.14) cautioned on its industry outlook.

Post 2Q results, we have revised down five companies’ estimates (versus two earnings upgrades) and 11 S-Chips’ target prices, except for Sino Grandness. We expect FY11F net profit growth to average 25% (down from 30% in 1Q) to support price appreciation.

Continue to like food and environmental plays. Based on our available quarterly estimates, the coming 3QCY11 earnings are unlikely to excite. We continue to like upstream food-related players e.g. China Animal HC, China Minzhong and Yamada; and environment counters e.g. Leader Environmental and Sound Global.

One could ride on Sino Grandess’ growth momentum as it expands its beverage distribution network in China. Also, one might want to consider Midas. We believe at historical trough of 0.8x P/B (vs. 2007 trough of 1.4x), concerns over the future of PRC railway industry and a dwindling order book are likely to be in the price.

 



Kim Eng highlights Hu An Cable's significantly expanding production capacity

Analyst: Eric Ong

400_2Dai-Zhixiang
Dai Zhixiang, chairman of Hu An Cable. Photo: Sim Kih

Hu An is planning to launch five new production lines, which are expected to be ready in 3Q11. Upon completion, this would double the production capacity in the mid-to-high-end power cable segment.

The group is also in the process of installing two ultra-high voltage power cable production lines due in 1Q12.

Hu An has posted a decent set of 1H11 results, which saw net profit grew by 11.6% YoY to RMB62.2m on the back of a 35% increase in revenue. The group is poised to benefit from the huge capex plans in the renewable energy sector by the Chinese government.

Valuation-wise, the stock currently trades at FY11 consensus PER of about 6.5x.

Recent story: HU AN CABLE: 1H2011 revenues up 35%; strong orders from power sector



NRA Capital says Foreland Fabrictech stock has 70% upside potential

Analyst: Lee Khai Chian

350_1simon_wong
Simon Wong, CFO of Foreland. Photo: Sim Kih

Foreland (FLFT) recorded another quarter of impressive profits. While other textile players whiffed signs of weakness in their business in the coming quarters, unbelievably, FLFT continues to see demand staying strong through the year end.

We revised our earnings forecast up by 32% in FY11 and 5-7% in FY12-13 to reflect 2Q’s outstanding results.

In view of the strong earnings, we raise our target price to 19.4 cts (prev 17 cts), based on a 40% discount (prev 30%) to 7x FY11 PER, given market’s current cautiousness and skepticism towards China issues.

We also view that smaller issues are unlikely to be re-rated unless market turns around which will not be for some time yet. The TP represents upside potential of 70%.

Recent story: FORELAND: Magic show of fabric technology


Comments  

0 #2 sunny 2011-09-16 18:20
Is it all talk and no do. This is a time of gloom and doom. Look at the euro crisis. Keep your money in your wallet.
Quote
0 #1 5121 2011-09-14 14:25
If only they would pay good dividends.....
Quote

Share Prices

Counter NameLastChange
AEM Holdings4.030-0.100
Avi-Tech Electronics0.280-
Broadway Ind0.1390.001
China Sunsine0.460-0.005
DISA0.003-
Food Empire0.510-
Fortress Minerals0.340-
Geo Energy Res0.370-
Golden Energy0.790-0.020
GSS Energy0.050-
InnoTek0.435-
ISDN Holdings0.425-0.030
ISOTeam0.104-
IX Biopharma0.136-0.003
Jiutian Chemical0.076-0.003
KSH Holdings0.340-0.005
Leader Env0.0500.001
Medtecs Intl0.110-0.004
Meta Health0.029-
Moya Asia0.089-
Nordic Group0.490-0.015
Oxley Holdings0.160-
REX International0.230-
Riverstone0.555-
Sinostar PEC0.180-0.010
Southern Alliance Mining0.630-
Straco Corp.0.410-
Sunpower Group0.280-0.010
The Trendlines0.086-0.003
Totm Technologies0.124-0.002
UG Healthcare0.179-0.001
Uni-Asia Group0.890-0.030
Wilmar Intl3.850-0.030
Yangzijiang Shipbldg1.040-0.040

NextInsight RSS

rss_2 NextInsight - Latest News

Online Now

We have 2129 guests and no members online