Excerpts of latest analyst reports
Maybank KE says buy Noble & Wilmar, Sell Olam
Ø We expect 2013 to herald a healthy rebound in share prices. We believe expectations have now swung far too negative on earnings and current valuations represent good entry points for longer-term exposure.
Ø NOBLE is our top pick within the sector. We believe it is most leveraged to a China recovery and has the healthiest balance sheet with investment grade debt ratings. Maintain BUY.
Ø We expect WILMAR to show earnings recovery in 2013 and to benefit from lacklustre CPO prices and turnover. Export tax changes will allow its benefits of scale to shine through. Upgrade to BUY.
Ø We are concerned about Olam’s “Capex Cliff”, with both debt refinancing and capex commitments front-loaded over the next 18 months. We also deem consensus too optimistic on earnings. Maintain SELL.
DBS Vickers highlights potential beneficiaries of 7m-population target
The Singapore government will release the Population White Paper soon, which is expected to draw great interest. We are expecting c.7m population parameter.
Medium term beneficiary will be the construction sector, while longer term transport, property and healthcare will benefit as well.
LTA has started the ball rolling with announced plans for doubling of rail lines to 360km by 2030. Our picks are ComfortDelgro (BUY, TP: S$2.05) over SMRT (FV, TP: S$1.50), Pan United (BUY, S$1.02) and Tat Hong (BUY, S$1.80) over contractors and property plays.
Longer term, the oversupply of property seems to be less of an issue assuming a 7m parameter. However, recent policy measures may continue to cast a pall over stock price.
Our picks are Wing Tai (BUY, TP: S$2.33) trading at 0.63x P/NAV, CapitaLand (BUY, TP: S$4.09) for its diversified exposure and Mapletree Commercial Trust (BUY, TP: S$1.35).
Sin Heng (NR,Fair Value: S$0.29) and CordLife (NR, Fair Value: S$0.65) are other potential beneficiaries.
StanChart has $1 target for CSE
Analyst: Stephen Hui
We reiterate our Outperform rating on CSE Global (CSE) with a price target of SGD 1.00, offering 28% potential upside.
We cut our 2012E and 2013E EPS by 19% and 10%, respectively, to account for management‟s lower guidance but we believe CSE‟s new order wins should boost investor confidence in the company.
We value CSE Global based on a Gordon Growth Model and our price target translates to 9x 2013E PER. CSE offers an attractive yield of 5.4% (2013E).
Valuations. CSE is currently trading on 7.x 2013E PER, with a 5.4% yield (2013E). We value the stock on a Gordon Growth Model, using conservative assumptions of equity beta of 1.25 and long-term growth of 0% to incorporate a potential higher risk with this stock.
Over the next three-to-five years, we believe significant potential exists in CSE‟s UK healthcare, Australia and environmental businesses.