| CIMB |
PHILLIP RESEARCH |
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Dutech Holdings
Maintain Add with higher target price of S$0.65
We like Dutech for its leadership position in the niche safe manufacturing sector (Dutech is Asia’s largest safe maker with c.20-25% share of global ATM safe market) and its ongoing developments (M&As, new contract wins). Dutech currently trades at FY16/17F core P/E of 7.9x/6.8x vs. peers/downstream players’ average of 17.3x/14.4x. Key rerating catalysts include 1) organic growth of existing businesses and 2) potential synergies from new acquisitions. Fluctuations in FX and steel prices are key risks.
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China Everbright Water Limited
Sluggish growth ahead
Investment Action
Lower GPM, FX losses, and higher tax expenses weighed against CEWL’s 9M16 performance. Moving forward, we expect weaker FY17 profitability as lower GPM erodes the bottom line. We revise our FY17 EPS forecast downwards by 29% from 4.5 SG cents to 3.2 SG cents. We maintain our “Accumulate” call with a reduced TP of S$0.63, based on lower estimated EPS of 3.2 SG cents, and the average forward PER of 19.8x.
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| OCBC SECURITIES |
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Sembcorp Marine: Disposes interest in COSCO Shipyard Group; removed from MSCI
Sembcorp Marine (SMM) has entered into a sale and purchase agreement with China Ocean Shipping (Group) Company (COSCO) to dispose of its 30% interest in Cosco Shipyard Group (CSG), which was acquired in 2004. Following this, SMM will only be left with its 4.98% shareholding in Cosco Corporation (Singapore) Ltd, which in turn has a 51% equity interest in CSG. The aggregate consideration is about S$220.7m and the net proceeds represent a gain of about S$48.3m over the carrying value of the investment. This disposal was undertaken as CSG is no longer a strategic investment nor a core asset of SMM. Going forward, poor performance of CSG will also be less of a drag on SMM’s poor results. Indeed, the net loss (before tax) attributable to the CSG shares being disposed of is S$30.7m, vs. S$69.3m pre-tax profit for SMM in 9M16.
On a separate note, SMM has also been removed from the MSCI Singapore index in the latest review. We believe this would have a greater impact on the stock compared to its earlier removal from the STI-30 list, as most funds are benchmarked to MSCI indices. Maintain SELL with S$1.13 fair value estimate on SMM.
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| MAYBANK KIM ENG |
UOB KAYHIAN |
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Centurion Corp (CENT SP)
Results in line; occupancy rate remains stable
Lacklustre outlook; maintain HOLD Outlook in the workers accommodation sector in Singapore remains unexciting, on lower foreign workers growth and ample supply of beds. On the other hand, the student dormitory segment should remain stable. Maintain HOLD with lowered DCF based TP of SGD0.36.
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Bumitama Agri (BAL SP)
Anticipating A Better 4Q16 And 2017
We remain positive on BAL’s outlook. Aside from having plantation assets with young age profiles, BAL saw a strong production recovery in 3Q16 on yield recovery from weather stress. Its recovery pace is faster than peers’ due to its strategic estate locations which are less affected by the drought. We are expecting a stronger performance in 4Q16 on higher production and CPO sales volume as inventories are drawn down. Maintain BUY. Target price: S$1.25.
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| MAYBANK KIM ENG |
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DeClout Ltd (DLL SP) Value creating incubator
Implied value of other entities at discount to book The value of DeClout’s stakes in Procurri (SGD0.09/sh) and Acclivis (SGD0.07/sh) accounts for SGD0.16 (vs. share price of SGD0.20). Hence the market is valuing the remaining businesses at SGD0.04, a steep 33% discount to the net asset value (NAV), of SGD0.06 of these investments. Hypothetically, if these assets were also to generate 200% ROI in value unlocking, that could translate to an additional SGD0.12/share. Bloomberg consensus TP for DeClout & Procurri is SGD0.37 & SGD0.67.
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