Maintain BUY; SOTP-based TP raised to S$1.32. We have changed our valuation methodology from price to book, to SOTP, to better reflect valuation for the various segments of shipbuilding, investment and property.
While some investors have concerns regarding Yangzijiang's investment segment, it is a supplementary business for Yangzijiang and its weighting should fall as the shipbuilding segment recovers. Bad debts have been minimal with proper evaluation processes and risk management procedures in place. As one of the most cost efficient yards in China, Yangzijiang is the best proxy to the shipbuilding recovery. Maintain BUY.
Management noted continued strong enquiries for newbuild
orders. As of September 2013, Yangzijiang has US$2.87 bn of
options for 29 bulkers and 22 containerships.
● We expect Yangzijiang to secure US$2 bn of contracts in 2013, and improving order momentum to drive a re-rating. We reiterate our OUTPERFORM rating and target price of S$1.30.
Maintain OW and S$1.50 PT: We continue to view YZJ as the best positioned private Chinese shipyard. We expect YZJ's continues ability to successfully execute in the large container and off-shore market to drive higher valuation multiples in the near-term at higher earnings in the longer-term. YZJ currently trades at just 5.5x 2014E P/E.
We continue to like Wilmar for its fully-integrated and well-diversified agri-business model, dominant global market positions in palm oil plantation/processing and soybean crushing, as well as its foothold in China and India, two of the most important consumer markets in the world.
Reiterate BUY with Street-high TP of SGD4.52, implying 42% upside.
SARIN TECHNOLOGIES ---> Macquarie Equities Research
We initiate coverage on Sarin Technologies with an Outperform recommendation and S$2.91 price target, representing a 91% TSR. The company is a unique
technology equipment supplier to the diamond industry with a 75% market share of the diamond planning equipment market.
We like the stock as it shifts its business model from ‘one-off capital equipment sales’ to ‘recurring income’, with earnings set to grow 97% (or at a 25%, 3-year
EPS CAGR) over the next 3 years (2013-16E), combined with the company’s strong FCF generation, net cash balance sheet, 40% ROE, proven track record of increasing shareholder returns, and attractive valuation.
The STI went below the 3150 level last week. We believe
further downside should be limited at c.3100 and see
bargain hunting opportunities there or slightly above on
the presumption that the US does not sink into debt
default.
The 3Q results season starts this week with SPH leading
the blue chips releases. SPH should interest investors
looking for dividend payout; our analyst expects
final/special DPS of 16 Scts.
Generally, we are expecting a lacklustre Q3 results season.
However there are still potential bright spots. Nam
Cheong could deliver positive earnings surprise as the
pace of vessel sales has been ahead of expectations YTD.
Indofood Agri is a potential earnings recovery play. But
we are cautious on Hi-P.
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