Excerpts from latest analyst reports....
AmFraser expects YANGZIJIANG to deliver record RMB4 b profit this year
Analyst: Lee Yue Jer
Last Friday, YZJ executed its share-buyback mandate by purchasing 1,000,000 shares at $0.89. Yesterday, it continued buying as the share price continued to plummet, taking in another 2,000,000 shares at $0.84.
YZJ’s buyback mandate allows it to buy up to 10% of its shares outstanding. We expect the company to continue to repurchase its shares, as it has done so during the 2008 depths when it resolutely bought back a total of 228.2m shares or 6.25% of its shares between prices of $0.27 and $0.46.
Since then, management’s judgment of the value of their shares was proven correct when the share price jumped nearly six-fold from an average of $0.36 to $2.09.
YZJ is currently trading at 3.8x forward P/E, compared to peers’ average around 8x, even though its gross/net margins are 1.5x/3x of regional shipbuilding averages.
Its P/B is 1.2x 2011F book value, which we consider a steal given its ROE of 30%. Further, its book value is depressed because it purchased Changbo yard at distressed valuations, gaining a hugely productive asset at firesale prices.
Given that we still expect YZJ to deliver record RMB4b profits this year and to maintain its historical 30% payout, our fair value remains unchanged at $1.60. We recommend averaging down the price of a solidly-performing company. BUY.
Recent story: 1 m share buyback by YANGZJIANG, 1 m by ARA chief
Nomura says BIOSENSORS has 35% upside to its $1.65 target
Analyst: Jit Soon Lim, CFA - NSL
Following the JW Medical Systems (JWMS) transaction, Biosensors is now well positioned with earnings underpinned by growth in Japan, China and Europe. The group’s balance sheet has improved significantly with shareholders’ funds expanding to USD1bn and cash rising to more than USD200mn. We reiterate Buy, as we project strong momentum in earnings growth over the next couple of years.
Valuation: Attractively priced relative to valuation of SGD1.65. Our SOTP-based TP of SGD1.65 has 35% implied upside, supported by 11.1x FY13F P/E on an EPS growth of 38.0% over FY12F- FY13.
OCBC initiates coverage of LIAN BENG, saying it has "strong order book with room for more"
We like Lian Beng for 1) their track record in both private residential and public housing construction projects;
2) its strong order book which gives management room to focus on winning contracts which are more margins accretive; and
3) its undemanding valuations against peers.
The company trades below local construction peers' average P/E, despite recording one of the highest ROE. We believe Lian Beng is well positioned to win more projects in private residential space and a beneficiary of increased HDB supply.
Therefore, we believe the discount on Lian Beng compared to peers is unwarranted. Applying a 5x forward P/E multiple to FY12F EPS, we derive a fair value estimate of S$0.52, implying c.54% upside; initiate with BUY.
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