JP Morgan initiates coverage of Noble Group, price target of $2.65
JP Morgan (analyst - Ajay Mirchandani): We assume coverage on Noble Group, a leading supply chain operator of various soft and hard commodities including soybeans, ethanol, coal and iron ore, with an OW rating and SOTP based Jun-10 Price Target of S$2.65 implying 20% upside potential.
We see Noble Group as a prime candidate to benefit from the global economic recovery forecasted in 2010 (JPM est. 2.7% for global GDP) and China’s continued growth and infrastructure development (PRC accounts for 18% of Noble’s sales namely iron ore and soybean). At our Price Target, Noble would be trading at FY10E P/E of 14.7x and 2.3x P/B.
Key risks to our PT remains execution risk, sharp slowdown in China and steep decline in demandand prices of commodities it trades in.
*****
DBS Vickers: Time to be selective about S-Reits
DBS Vickers (analysts – Lock Mun Yee & Derek Tan): Sreit sector is currently yielding a weighted average 7.5% on our FY10 estimates and trading at 0.76x P/bk NAV.
Within the sector out top picks would be those with near term catalysts such as CDL Hospitality Trust and Ascott Residence Trust, which are key beneficiaries of the Integrated Resorts and is projected to experience a recovery in earnings on the back of a better tourism outlook.
We continue to favour retail landlords such as Frasers Centrepoint Trust for its suburban retail exposure and strong asset injection pipeline as well as Suntec on valuation grounds. Amongst industrial players, we prefer Mapletree Logistics Trust for its higher than average yield of 9.4% and attractive P/NAV multiples.
