Excerpts from analysts' reports
UOB Kay Hian says buy ST Engineering as proxy to US recovery
Analyst: K. Ajith (left)
• Orderbook at record level, but market cap is below orderbook. Orderbook remains at record level of $13.6 b, but STE is trading at just 0.9x orderbook, well below long-term mean of 1.06x.
UOB Kay Hian says buy ST Engineering as proxy to US recovery
Analyst: K. Ajith (left)• Orderbook at record level, but market cap is below orderbook. Orderbook remains at record level of $13.6 b, but STE is trading at just 0.9x orderbook, well below long-term mean of 1.06x.
With enhanced capabilities, STE should arguably be trading at least near mean orderbook.
Various economic indicators suggest that the US economic recovery is gathering momentum. STE derives 26% of its revenue from the US and is thus a proxy to the US recovery.
Recent investments in ship repair and aerospace are likely to yield dividends in late 2014 and 2015.
The stock has underperformed the FSSTI ytd, but this is likely to reverse. Maintain BUY. Target price: S$4.50.
Recent story: ST ENGINEERING -- target $4.30; QT VASCULAR -- 51 cents
DBS Vickers says 'buy Yangzijiang on weakness'  Analyst: Ho Pei Hwa (left)» First jackup rig is c.40% completed and on track for delivery in mid-2015 » Healthy order enquiries; in talks for orders for first semi-submersible and LPG carrier » Attractive risk-reward amid market jitters » BUY on weakness; TP unchanged at S$1.55 Steering into offshore. Based on our recent discussions with management, construction progress of its first jackup rig is well on track. Steel blocks are being assembled at Taichang yard and the rig is at the c. 40% completion stage currently. The hull is expected to be completed by end Aug, which would lift the completion progress to 55%. While LOIs for 2+2 mid-water semi-submersibles with PrimePoint have been called off, Yangzijiang continues to be in active talks with other prospective clients. Industry fundamentals remain sound. The ordering momentum for bulk carriers and containerships tapered off in May 14 in the face of weakness in the shipping market and possibly price impasse between shipowners and shipbuilders. We believe the short term breather is positive for a sustainable recovery of the shipbuilding industry in the near to medium term. We remain sanguine on the bulk carrier segment, which is seeing improving supply/ demand dynamics with a low orderbook to fleet ratio of 22%. In addition, Yangzijiang is also moving up the value chain and intends to clinch orders for LPG/LNG carriers and larger mega containerships, ie 14k/16k TEUs, which would take Yangzijiang to the next level. Reiterate BUY; SOTP-based TP unchanged at S$1.55.Valuations have fallen to an attractive 6x FY14F PE and 1.0x P/BV following Guoheng’s allegations against Mr Ren. We are giving this matter the benefit of the doubt given the seemingly ambiguous motives behind, and Mr Ren’s dismissal of these allegations. The current share price weakness presents buying opportunities for investors who believe in the fundamentals of Yangzijiang. |
