CAH delisting offer to be 'attractive', INDOFOOD AGRI target lowered, STX OSV 'cheap'

Excerpts from latest analyst reports....

DBS Vickers expects attractive delisting offer for CHINA ANIMAL HEALTHCARE

Analysts: Alfie Yeo & Andy Sim, CFA

Wang Yan Gang, Chairman of China Animal Healthcare (right), at the IPO of his company in 2008. Now, he aims to say sayonara Singapore. NextInsight file photo

Since the company has indicated its intent to delist from the SGX, we believe voluntary delisting will be more likely as opposed to a general offer. As long as shareholders vote in favour of the delisting according to rule 1307 of the SGX listing manual at the EGM, CAL will be delisted.

Shareholders can then choose to accept the offer at the exit price or hold on to their shares for trading on HKSE.

Exit offer needs to be attractive. SGX's "no objection" to CAL's potential delisting is subject to controlling shareholders abstaining from voting at the EGM. This means that it will be more difficult to achieve the "75% present and voting in favour of the delisting" criteria at the EGM without controlling shareholders' vote (promoters have approximately 53%).

The exit offer price needs to be attractive to win over the independent shareholders in order to fulfill the "75% voting in favour" threshold. Also the EGM must fulfill the criteria of not more than “10% voting against” the delisting.

Recent story: CHINA ANIMAL HEALTHCARE: Insights from my 1-1 meeting with CFO

Daiwa lowers INDO AGRI target price to $1.41

Analyst: Pyari Menon

CPO price movements would pose the primary risk for the stock.

Despite the stock’s (Indofood Agri Resources, IFAR) low valuation multiples, we believe investor sentiment towards the stock is unlikely to pick up any time soon, given the lacklustre results and low dividend payout plans.

The company said it has a 20% dividend payout target, but has not committed to it.

We prefer plantation plays like First Resources Ltd (FR SP, S$1.43, Outperform [2]) and Golden Agri Resources Ltd (GGR SP, S$0.67, Outperform [2]) that are growing faster (in terms of net profit) than IFAR.

We have lowered our six-month target price for IndoAgri to S$1.41 (from S$1.44), based on our ROE-COE/growth methodology. Our new target price implies a 2012E PER of 8.4x.

CPO price movements would pose the primary risk for the stock on the up/downside.

CIMB says STX OSV, at 7X CY13 PE, is 'cheap'

Analyst: Yeo Zhi Bin

STX OSV has a world-class yard building Offshore Support Vessels. Photo: Company

STX OSV is on course to meet our order target. YTD, it has secured NOK6.3bn or 70% of our FY11 order target of NOK9bn (excluding Transpetro orders).

Management thinks an order intake of NOK9bn-10bn for FY11 (excluding Transpetro orders) is possible.

We view the shareholder’s news positively, unlike the previous share overhang. If a transaction does take place at the reported price of S$1.31/share, this will represent about a 16-18% premium to its current stock price.

Now is an opportune time for investors looking for M&A plays. Fundamentally, our view is unchanged. Neither oil prices nor credit has collapsed, unlike the last crisis. In addition, an influx of new deepwater rigs in 2013 could induce demand for more high-end OSVs. We could see such orders in 2012.

This is a world-class yard trading at 7x CY13 P/E, cheap, in our assessment.

Recent story: STX OSV is 'attractive, YINGLI revenue to grow 6-fold this year