KUALA LUMPUR: OSK Research is maintaining its fair value for Salcon at 72 sen pending its disclosure of more details of the industrial wastewater treatment plant (IWTP) in China.
OSK Research said on Tuesday, March 22 Salcon's subsidiary Salcon Changzhou (HK) Ltd secured a 30 million litres per day IWTP concession in Jiangsu Province, China. The concession period is for 30 years upon the signing of the agreement with Jiangsu Province and will be acquired via a transfer-operate-transfer (T-O-T) basis.
The acquisition is priced at 60 million renminbi, or about RM27.7 million (as of March 9, 2011 based on RM1 vs 2.1659 renminbi).
'Pending the disclosure of more salient terms (especially on the cost structure) on the IWTP, we maintain our FV for Salcon at 72 sen. Riding on the company's growing portfolio of water concessions in China, we also maintain our BUY recommendation on the stock. Securing the latest concession enhances the stock's FV,' it said.
Showing posts with label OSK Marketing Research. Show all posts
Showing posts with label OSK Marketing Research. Show all posts
Tuesday, May 10, 2011
Tuesday, March 29, 2011
OSK Research maintains Buy on Alam Maritim, unchanged TP RM1.50
OSK Research is maintaining its Buy call on Alam Maritim with an unchanged target price of RM1.50.
Alam Maritim recently accepted an extension of a spot charter contract to supply of one straight supply vessel worth a contract value of RM11.0m.
OSK Research said the company's announcement of the one-year contract however did not identify the customer, but it believed it is likely be Petronas or its PSC contractors since this is a renewal of contract and the bulk of Alam's existing vessel contracts are from the domestic market
'After the company undertook a kitchen sinking exercise in FY10, we believe the worst is now over. However, as we mentioned earlier, we do not expect Alam's 1H11 results to be very good as it was still affected by the monsoon season in 1Q.
'Also, Petronas' focus is now on the initial stage of marginal oilfield developments and not towards the tail-end of activities, which would more of a 2H11 focus. We maintain a Buy on the company for now, with an unchanged target price of RM1.50 based on the existing PER of 15x FY11 EPS,' it said.
Alam Maritim recently accepted an extension of a spot charter contract to supply of one straight supply vessel worth a contract value of RM11.0m.
OSK Research said the company's announcement of the one-year contract however did not identify the customer, but it believed it is likely be Petronas or its PSC contractors since this is a renewal of contract and the bulk of Alam's existing vessel contracts are from the domestic market
'After the company undertook a kitchen sinking exercise in FY10, we believe the worst is now over. However, as we mentioned earlier, we do not expect Alam's 1H11 results to be very good as it was still affected by the monsoon season in 1Q.
'Also, Petronas' focus is now on the initial stage of marginal oilfield developments and not towards the tail-end of activities, which would more of a 2H11 focus. We maintain a Buy on the company for now, with an unchanged target price of RM1.50 based on the existing PER of 15x FY11 EPS,' it said.
Friday, March 18, 2011
SP Setia a 'buy' at HwangDBS, OSK
Several research houses have maintained "buy" calls on SP Setia Bhd, reflecting its within-expectation first quarter 2011 results.
Both HwangDBS Vickers Research and OSK Research today left their target prices unchanged at RM7.90 and RM7.23 respectively.
"SP Setia is in a good position to win more land deals given its strong execution track record and solid balance sheet which is set to be enhanced further by a RM1 billion placement," HwangDBS Vickers said in its note today.
OSK Research said SP Setia was set for an impressive showing this year, driven by unbilled sales of more than RM2.2 billion and new launches.
ECMLibra Research, meanwhile, maintained its "hold" recommendation on SP Setia and said RM6.00 would be its fair value.
"Although we expect more landbank acquisitions but we believe this has been priced-in and the impending 15 per cent private placement may cap further upside in the near-term," ECMLibra added.
Both HwangDBS Vickers Research and OSK Research today left their target prices unchanged at RM7.90 and RM7.23 respectively.
"SP Setia is in a good position to win more land deals given its strong execution track record and solid balance sheet which is set to be enhanced further by a RM1 billion placement," HwangDBS Vickers said in its note today.
OSK Research said SP Setia was set for an impressive showing this year, driven by unbilled sales of more than RM2.2 billion and new launches.
ECMLibra Research, meanwhile, maintained its "hold" recommendation on SP Setia and said RM6.00 would be its fair value.
"Although we expect more landbank acquisitions but we believe this has been priced-in and the impending 15 per cent private placement may cap further upside in the near-term," ECMLibra added.
OSK Research maintains Trading Buy on Faber, unch TP RM3.02
KUALA LUMPUR: OSK Research is maintaining a Trading Buy on FABER GROUP BHD [] at an unchanged target price of RM3.02 based on SOP valuation.
The research house said on Friday, March 18 that it still thinks'' Faber should be able to get its existing concession renewed in view of its track record and excellent execution of the existing concession, which should provide the upward catalyst for its share price.
On Thursday, Faber announced a capital reduction by way of cancellation of 75 sen of the existing par value of each RM1 ordinary share, and ii) a share premium reduction of RM116m to reduce the accumulated losses in Faber Group.
'The proposals came in as no surprise given that we had mentioned in our last March 16 report that Faber was in the midst of finalising proposals to strengthen its balance sheet, largely with regard to 'legacy' accumulated losses at the company level.
'As we had mentioned earlier, despite the company's willingness to pay a higher dividend payout, its ability to increase the payout ratio had been constrained by its accumulated losses at the company level,' it said.
OSK Research said the main rationale for the proposed corporate exercise is to enable Faber to beef up its capacity to raise its dividend payout and provide higher dividend returns to its shareholders.
The research house said on Friday, March 18 that it still thinks'' Faber should be able to get its existing concession renewed in view of its track record and excellent execution of the existing concession, which should provide the upward catalyst for its share price.
On Thursday, Faber announced a capital reduction by way of cancellation of 75 sen of the existing par value of each RM1 ordinary share, and ii) a share premium reduction of RM116m to reduce the accumulated losses in Faber Group.
'The proposals came in as no surprise given that we had mentioned in our last March 16 report that Faber was in the midst of finalising proposals to strengthen its balance sheet, largely with regard to 'legacy' accumulated losses at the company level.
'As we had mentioned earlier, despite the company's willingness to pay a higher dividend payout, its ability to increase the payout ratio had been constrained by its accumulated losses at the company level,' it said.
OSK Research said the main rationale for the proposed corporate exercise is to enable Faber to beef up its capacity to raise its dividend payout and provide higher dividend returns to its shareholders.
Thursday, December 30, 2010
SUNWAY - Real construction growth forecasted at 4pc
Stock Name: SUNWAY
Company Name: SUNWAY HOLDINGS BHD
Research House: OSK
Real construction growth for 2011 has been projected at four per cent, OSK Research said in its 2011 report.
It re-rated valuations upwards for the construction sector fuelled by the possibility of an early general election, implementation of the proposed projects under the Economic Transformation Programme and Budget 2011.
In its research note, OSK Research said the top pick was Sunway with a target price of RM2.72 and within the small cap space, AZRB, with a target price of RM1.51.
"Investors should pick Gamuda (TP: RM4.31) for the euphoria over the proposed MRT. Lastly, we recommend Naim (TP: RM5.10) for the Sarawak theme," OSK Research said.
In its overview of the construction sector, OSK Research said it was a constructive year for the construction sector.
"The KL Construction Index chalked up a year-to-date return of 24 per cent," it said, adding that a reduction was however expected for 2011 and 2012 development expenditure which would be negative for the sector.
"For 2011, development expenditure is targeted at RM48.5 billion, down 9 per cent year-on-year (y-o-y).
"We expect the negatives of lower development expenditure to be offset by more jobs being implemented via private finance incentives (PFI)," OSK Research added.
It said the momentum of contract awards would continue into 2011 and conservatively set domestic job wins at an estimated RM15 billion.
"Jan-Oct domestic contract awards totalled RM12.1 billion (+66.8 per cent y-o-y) and is very likely to surpass 2010 target of RM13 billion," OSK Research elaborated.
Company Name: SUNWAY HOLDINGS BHD
Research House: OSK
Real construction growth for 2011 has been projected at four per cent, OSK Research said in its 2011 report.
It re-rated valuations upwards for the construction sector fuelled by the possibility of an early general election, implementation of the proposed projects under the Economic Transformation Programme and Budget 2011.
In its research note, OSK Research said the top pick was Sunway with a target price of RM2.72 and within the small cap space, AZRB, with a target price of RM1.51.
"Investors should pick Gamuda (TP: RM4.31) for the euphoria over the proposed MRT. Lastly, we recommend Naim (TP: RM5.10) for the Sarawak theme," OSK Research said.
In its overview of the construction sector, OSK Research said it was a constructive year for the construction sector.
"The KL Construction Index chalked up a year-to-date return of 24 per cent," it said, adding that a reduction was however expected for 2011 and 2012 development expenditure which would be negative for the sector.
"For 2011, development expenditure is targeted at RM48.5 billion, down 9 per cent year-on-year (y-o-y).
"We expect the negatives of lower development expenditure to be offset by more jobs being implemented via private finance incentives (PFI)," OSK Research added.
It said the momentum of contract awards would continue into 2011 and conservatively set domestic job wins at an estimated RM15 billion.
"Jan-Oct domestic contract awards totalled RM12.1 billion (+66.8 per cent y-o-y) and is very likely to surpass 2010 target of RM13 billion," OSK Research elaborated.
Wednesday, December 29, 2010
Tobacco industry volume may drop 8pc: OSK
OSK Research is projecting an eight per cent drop in tobacco industry volume which will result in tobacco manufacturers experiencing an earnings decline of between five per cent and ten per cent next year.
The research house said its slightly higher natural attrition rate for tobacco consumption was mainly due to more smokers kicking the habit owing to the currently high price of cigarettes, it said in its research note today.
A steep hike in the excise duty of cigarettes, of as much as three sen per stick a week before 2011 Budget, made tobacco manufacturers revise selling price by more than the quantum of duty increase in order to pass on the cost to consumers.
'In view of that, we expect the sector to see higher selling prices in downtrading to value-for-money brands from premium brands, a greater incidence of illicit trade and a greater likelihood of brand switching next year.
'We think the resulting higher selling prices of a pack of cigarettes, at RM10, would curb the consumption and further encourage the proliferation of illicit cigarettes next year.
'Keeping our bearish view, we maintain our underweight recommendation for the sector,' OSK added.
The research house said its slightly higher natural attrition rate for tobacco consumption was mainly due to more smokers kicking the habit owing to the currently high price of cigarettes, it said in its research note today.
A steep hike in the excise duty of cigarettes, of as much as three sen per stick a week before 2011 Budget, made tobacco manufacturers revise selling price by more than the quantum of duty increase in order to pass on the cost to consumers.
'In view of that, we expect the sector to see higher selling prices in downtrading to value-for-money brands from premium brands, a greater incidence of illicit trade and a greater likelihood of brand switching next year.
'We think the resulting higher selling prices of a pack of cigarettes, at RM10, would curb the consumption and further encourage the proliferation of illicit cigarettes next year.
'Keeping our bearish view, we maintain our underweight recommendation for the sector,' OSK added.
Monday, December 20, 2010
IJM at 43-month high, a 'neutral' at OSK
Stock Name: IJM
Company Name: IJM CORPORATION BHD
Research House: OSK
IJM Corp, a Malaysian builder and property group, rose to its highest level in almost four years after winning a RM460.6 million building contract from Naza TTDI Construction Sdn Bhd.
The stock climbed 2.7 per cent to RM6.44 at 11:09 a.m. local time, set for its highest close since May 3, 2007.
Meanwhile, OSK Research Sdn Bhd said it was keeping the earnings forecast unchanged for IJM Corp for the financial year 2011 but raised the numbers for financial year 2012-2013 between one per cent and six per cent.
Last Friday, IJM announced it won a RM461 million contract for phase three of the Platinum Park development by Naza TTDI.
The job scope for Platinum Park involves two office tower blocks, podium car parks and basement car parks which is scheduled for completion by December 2013 and will feed into IJM's financial year 2011-2014 earnings.
"Jobs won so far, into financial year 2011, totalling RM1.84 billion, have beaten our RM1.5 billion target," it said in a research note today.
Potential jobs in the pipeline include high-rise buildings in Kuala Lumpur, Kelau Dam, West Coast Expressway and Light Rail Transit packages.
"Given IJM's track record in high-rise buildings in the city centre, we believe it stands a chance of participating in the 100-storey Warisan Merdeka tower, which is expected to cost RM2.5 billion to RM3 billion," it added.
OSK maintained a "neutral" call on IJM given the limited 5.2 per cent upside
Read more: IJM at 43-month high, a 'neutral' at OSK
Company Name: IJM CORPORATION BHD
Research House: OSK
IJM Corp, a Malaysian builder and property group, rose to its highest level in almost four years after winning a RM460.6 million building contract from Naza TTDI Construction Sdn Bhd.
The stock climbed 2.7 per cent to RM6.44 at 11:09 a.m. local time, set for its highest close since May 3, 2007.
Meanwhile, OSK Research Sdn Bhd said it was keeping the earnings forecast unchanged for IJM Corp for the financial year 2011 but raised the numbers for financial year 2012-2013 between one per cent and six per cent.
Last Friday, IJM announced it won a RM461 million contract for phase three of the Platinum Park development by Naza TTDI.
The job scope for Platinum Park involves two office tower blocks, podium car parks and basement car parks which is scheduled for completion by December 2013 and will feed into IJM's financial year 2011-2014 earnings.
"Jobs won so far, into financial year 2011, totalling RM1.84 billion, have beaten our RM1.5 billion target," it said in a research note today.
Potential jobs in the pipeline include high-rise buildings in Kuala Lumpur, Kelau Dam, West Coast Expressway and Light Rail Transit packages.
"Given IJM's track record in high-rise buildings in the city centre, we believe it stands a chance of participating in the 100-storey Warisan Merdeka tower, which is expected to cost RM2.5 billion to RM3 billion," it added.
OSK maintained a "neutral" call on IJM given the limited 5.2 per cent upside
Read more: IJM at 43-month high, a 'neutral' at OSK
Saturday, December 18, 2010
NOTION - Notion Vtec sued over share sale agreement
Stock Name: NOTION
Company Name: NOTION VTEC BHD
Research House: OSK
Notion VTec Bhd
( RM1.62)
Maintain sell at RM1.65 with target price RM1.45: Notion has been served with a writ and statement of claim on behalf of three key personnel of Swiss Impressive Sdn Bhd for the alleged breach by Notion of a share sale agreement dated Dec 10, 2009.
The principal business of Swiss Impressive is in designing, tooling and manufacturing high precision appearance parts for digital cameras and other consumer electronic devices. Notion has 70% equity interest in this subsidiary, while two of the plaintiffs collectively own the remaining 30%. In FY10, Swiss Impressive recorded an unaudited revenue and loss after tax of RM3.5 million and RM300,000 respectively.
In 2009, Notion entered into a share sale agreement with the plaintiffs to dispose of its 70% equity interest in Swiss Impressive to the plaintiffs for RM400,000. Management was of the view the business of Swiss was no longer in line with Notion's present business strategy. The agreement lapsed prior to the completion and finalisation of an audit on Swiss. The suit came about due to the non-completion of the share sale agreement, which the plaintiffs alleged was due to a breach by Notion.
The plaintiffs are claiming RM4.5 million from Notion, but the company has instructed its solicitors to defend the action. This suit is unlikely to have a major impact on Notion. The financial contribution from Swiss to Notion was considered insignificant as Notion recorded RM226.8 million of revenue and RM37.4 million earnings in FY10. On the operations side, Notion had appointed new personnel to manage Swiss. Should Notion lose this case, it would have no problem absorbing the RM4.5 million claim considering that it has a cash hoard of RM36.9 million as at Sept 30.
Due to the poor outlook for the HDD business, possibly until 1Q11, and given the uncertainty over its 2.5' HDD business, we remain cautious and stick to our 'sell' call by pegging its target price at seven times FY11 price-earnings ratio. For FY11, the company will give more priority to the camera business to sustain its uninterrupted earnings growth streak since FY03. It plans to expand its plant in Thailand from 25,000 sq ft to 100,000 sq ft by May 2011, mainly to cater for Nikon and new camera customers. We think it is still too early to factor in any meaningful contribution from the Thai plant expansion. The Thailand plant only contributed revenue of about RM1.4 million for FY10. ' OSK Investment Research
Company Name: NOTION VTEC BHD
Research House: OSK
Notion VTec Bhd
( RM1.62)
Maintain sell at RM1.65 with target price RM1.45: Notion has been served with a writ and statement of claim on behalf of three key personnel of Swiss Impressive Sdn Bhd for the alleged breach by Notion of a share sale agreement dated Dec 10, 2009.
The principal business of Swiss Impressive is in designing, tooling and manufacturing high precision appearance parts for digital cameras and other consumer electronic devices. Notion has 70% equity interest in this subsidiary, while two of the plaintiffs collectively own the remaining 30%. In FY10, Swiss Impressive recorded an unaudited revenue and loss after tax of RM3.5 million and RM300,000 respectively.
In 2009, Notion entered into a share sale agreement with the plaintiffs to dispose of its 70% equity interest in Swiss Impressive to the plaintiffs for RM400,000. Management was of the view the business of Swiss was no longer in line with Notion's present business strategy. The agreement lapsed prior to the completion and finalisation of an audit on Swiss. The suit came about due to the non-completion of the share sale agreement, which the plaintiffs alleged was due to a breach by Notion.
The plaintiffs are claiming RM4.5 million from Notion, but the company has instructed its solicitors to defend the action. This suit is unlikely to have a major impact on Notion. The financial contribution from Swiss to Notion was considered insignificant as Notion recorded RM226.8 million of revenue and RM37.4 million earnings in FY10. On the operations side, Notion had appointed new personnel to manage Swiss. Should Notion lose this case, it would have no problem absorbing the RM4.5 million claim considering that it has a cash hoard of RM36.9 million as at Sept 30.
Due to the poor outlook for the HDD business, possibly until 1Q11, and given the uncertainty over its 2.5' HDD business, we remain cautious and stick to our 'sell' call by pegging its target price at seven times FY11 price-earnings ratio. For FY11, the company will give more priority to the camera business to sustain its uninterrupted earnings growth streak since FY03. It plans to expand its plant in Thailand from 25,000 sq ft to 100,000 sq ft by May 2011, mainly to cater for Nikon and new camera customers. We think it is still too early to factor in any meaningful contribution from the Thai plant expansion. The Thailand plant only contributed revenue of about RM1.4 million for FY10. ' OSK Investment Research
Friday, December 10, 2010
KENCANA - OSK Research: Kencana remains top pick for O&G sector
Stock Name: KENCANA
Company Name: KENCANA PETROLEUM BHD
Research House: OSK
KUALA LUMPUR: OSK Research said KENCANA PETROLEUM BHD [], which is expected to announce its 1QFY11 results next Monday, Dec 13 will unveil numbers that are better on-quarter.
The research house said the better on-quarter performance would be underpinned by contributions from the MKR-1, recognition of a portion of fabrication works secured since April 2010, better yard utilisation on-quarter, as well as improved cost management and production efficiency.
'We believe the company's recently proposed fund raising exercise will also provide the stock with growth upside in the coming months. Kencana remains our top pick for the O&G sector. Maintain Buy with a higher target price of RM2.93 (previously RM2.57),' it said.
Company Name: KENCANA PETROLEUM BHD
Research House: OSK
KUALA LUMPUR: OSK Research said KENCANA PETROLEUM BHD [], which is expected to announce its 1QFY11 results next Monday, Dec 13 will unveil numbers that are better on-quarter.
The research house said the better on-quarter performance would be underpinned by contributions from the MKR-1, recognition of a portion of fabrication works secured since April 2010, better yard utilisation on-quarter, as well as improved cost management and production efficiency.
'We believe the company's recently proposed fund raising exercise will also provide the stock with growth upside in the coming months. Kencana remains our top pick for the O&G sector. Maintain Buy with a higher target price of RM2.93 (previously RM2.57),' it said.
Monday, December 6, 2010
PETRA - OSK Research: Worst over for Petra Perdana
Stock Name: PETRA
Company Name: PETRA PERDANA BHD
Research House: OSK
KUALA LUMPUR: OSK Research said it recently visited Petra Perdana and concluded that the worst for the company should be over.
The research house said that Petra Perdana's share price hit the lowest point of 73.5 sen recently and it believes that it has hit bottom.
'The company has successfully completed its 3:8 RI exercise, which had been view negatively by some investors. Also, we believe there is unlikely to be a further downgrade by MARC on its RM800 million dual currency revolving facility in the immediate term since the rating was done just recently.
'Finally, we think the 2QFY10 quarter was possibly the worst for the company when it reported a net loss of RM33 million, which it managed to improve its performance in 3QFY10 by narrowing the loss by 28% q-o-q,' it said.
Company Name: PETRA PERDANA BHD
Research House: OSK
KUALA LUMPUR: OSK Research said it recently visited Petra Perdana and concluded that the worst for the company should be over.
The research house said that Petra Perdana's share price hit the lowest point of 73.5 sen recently and it believes that it has hit bottom.
'The company has successfully completed its 3:8 RI exercise, which had been view negatively by some investors. Also, we believe there is unlikely to be a further downgrade by MARC on its RM800 million dual currency revolving facility in the immediate term since the rating was done just recently.
'Finally, we think the 2QFY10 quarter was possibly the worst for the company when it reported a net loss of RM33 million, which it managed to improve its performance in 3QFY10 by narrowing the loss by 28% q-o-q,' it said.
Thursday, December 2, 2010
ALAM - OSK Research cautions of potential provisions by Alam Maritim
Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD
Research House: OSK
KUALA LUMPUR: OSK Research has cautioned of potential provision for doubtful debts by Alam Maritim following its exposure to Vastalux which is currently undergoing debt restructuring.
'We are downgrading our FY10-11 earnings by 12%-18% respectively and cut the stock to a Neutral, with a lower target price of RM1,' it said on Thursday, Dec 2. The previous target price was RM1.46.
OSK Research said Vastalux had proposed a debt restructuring scheme with its creditors, one of which is Alam Maritim.
The amount owing by Vastalux to its creditors is about RM146.8 million, to be resolved through: i) new ordinary shares of Vastalux (20%); ii) redeemable cumulative unsecured loan stocks (RCULS) (50%), and iii) the balance 30% to be waived.
Alam together with the other creditors has until Friday to decide whether to accept the proposal, to re-negotiate further, or consider the amount owing as bad debts.
'We understand that management is still considering their options and no decision had been made to date. Also, we gathered that the amount owing to Alam is less than RM30 million,' said the research house
Company Name: ALAM MARITIM RESOURCES BHD
Research House: OSK
KUALA LUMPUR: OSK Research has cautioned of potential provision for doubtful debts by Alam Maritim following its exposure to Vastalux which is currently undergoing debt restructuring.
'We are downgrading our FY10-11 earnings by 12%-18% respectively and cut the stock to a Neutral, with a lower target price of RM1,' it said on Thursday, Dec 2. The previous target price was RM1.46.
OSK Research said Vastalux had proposed a debt restructuring scheme with its creditors, one of which is Alam Maritim.
The amount owing by Vastalux to its creditors is about RM146.8 million, to be resolved through: i) new ordinary shares of Vastalux (20%); ii) redeemable cumulative unsecured loan stocks (RCULS) (50%), and iii) the balance 30% to be waived.
Alam together with the other creditors has until Friday to decide whether to accept the proposal, to re-negotiate further, or consider the amount owing as bad debts.
'We understand that management is still considering their options and no decision had been made to date. Also, we gathered that the amount owing to Alam is less than RM30 million,' said the research house
DIALOG - OSK Research maintains TP for Dialog at RM1.47
Stock Name: DIALOG
Company Name: DIALOG GROUP BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its'' target price for DIALOG GROUP BHD [] at RM1.47 based on a sum-of-parts valuation following the latest corporate development involving the acquisition of Fitzroy Engineering Group Limited (FEGL) for a total cash consideration of NZ$13.5 million (RM31.7m).
'We understand that FEGL has been generating an average net profit of about NZ$3 million (RM7 million) over the past three years. This amount is of course immaterial compared to our net profit forecast for Dialog of about RM139 million and RM149 million for FY11 and FY12 respectively.
'Given that the earnings contribution for Dialog's FY11 is immaterial as announced, we are keeping our FY11-12 earnings unchanged for now,' it said on Thursday, Dec 2.
The acquisition of FEGL to strengthen and enhance its fabrication business in the O&G and petrochemical industries. This would also enable it to penetrate into the New Zealand and Australian markets.
Company Name: DIALOG GROUP BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its'' target price for DIALOG GROUP BHD [] at RM1.47 based on a sum-of-parts valuation following the latest corporate development involving the acquisition of Fitzroy Engineering Group Limited (FEGL) for a total cash consideration of NZ$13.5 million (RM31.7m).
'We understand that FEGL has been generating an average net profit of about NZ$3 million (RM7 million) over the past three years. This amount is of course immaterial compared to our net profit forecast for Dialog of about RM139 million and RM149 million for FY11 and FY12 respectively.
'Given that the earnings contribution for Dialog's FY11 is immaterial as announced, we are keeping our FY11-12 earnings unchanged for now,' it said on Thursday, Dec 2.
The acquisition of FEGL to strengthen and enhance its fabrication business in the O&G and petrochemical industries. This would also enable it to penetrate into the New Zealand and Australian markets.
DELLOYD - Best numbers on record for Delloyd Ventures
Stock Name: DELLOYD
Company Name: DELLOYD VENTURES BHD
Research House: OSK
Delloyd Ventures Bhd
(DEC 2, RM3.13)
Maintain buy at RM3.13 with target price RM3.90: Delloyd Ventures (DV) registered a core net profit of RM13.3 million for the quarter on the back of revenue of RM99 million, with quarter-on-quarter (q-o-q) growth of 10% and 30.7% respectively. Revenue growth was witnessed across all segments, as DV reaped the benefits from its robust Indonesian autoparts division and higher output from its plantation side, which saw earnings more than double q-o-q as we expected.
While the results were lower at the PBT level (as minority income was somewhat distorted by translation losses), representing 71% of our full-year forecast (in line with consensus nonetheless), we deem the results in line as we expect to see another uptick in earnings in 4Q in view of the uptrend in crude palm oil (CPO) prices and the delivery of its buses.
DV's margins continued to expand, with earnings before interest and tax (Ebit) margin rising to its highest level of 17% owing to significant yield improvement in its plantation division amid surging CPO prices in the past few months. However, auto margins during the period were relatively lower as the lower volume generated from its Malaysia operation affected margins, while its distribution division has become operationally profitable given the increase in number of vehicles sold.
We remain optimistic on DV's prospects and diversification into the plantation business, which have proven the naysayers wrong. DV also benefitted from the growth of its automotive autoparts segment in Indonesia,which capitalised on the robust demand for vehicles in that country, and increasing orders for its elongated buses. With our earnings unchanged, we retain our target price of RM3.90 and 'buy' call. ' OSK Investment Research, DEC 2
Company Name: DELLOYD VENTURES BHD
Research House: OSK
Delloyd Ventures Bhd
(DEC 2, RM3.13)
Maintain buy at RM3.13 with target price RM3.90: Delloyd Ventures (DV) registered a core net profit of RM13.3 million for the quarter on the back of revenue of RM99 million, with quarter-on-quarter (q-o-q) growth of 10% and 30.7% respectively. Revenue growth was witnessed across all segments, as DV reaped the benefits from its robust Indonesian autoparts division and higher output from its plantation side, which saw earnings more than double q-o-q as we expected.
While the results were lower at the PBT level (as minority income was somewhat distorted by translation losses), representing 71% of our full-year forecast (in line with consensus nonetheless), we deem the results in line as we expect to see another uptick in earnings in 4Q in view of the uptrend in crude palm oil (CPO) prices and the delivery of its buses.
DV's margins continued to expand, with earnings before interest and tax (Ebit) margin rising to its highest level of 17% owing to significant yield improvement in its plantation division amid surging CPO prices in the past few months. However, auto margins during the period were relatively lower as the lower volume generated from its Malaysia operation affected margins, while its distribution division has become operationally profitable given the increase in number of vehicles sold.
We remain optimistic on DV's prospects and diversification into the plantation business, which have proven the naysayers wrong. DV also benefitted from the growth of its automotive autoparts segment in Indonesia,which capitalised on the robust demand for vehicles in that country, and increasing orders for its elongated buses. With our earnings unchanged, we retain our target price of RM3.90 and 'buy' call. ' OSK Investment Research, DEC 2
Wednesday, December 1, 2010
WASEONG - OSK Research: Wah Seong results below consensus
Stock Name: WASEONG
Company Name: WAH SEONG CORPORATION BHD
Research House: OSK
KUALA LUMPUR: OSK Research said Wah Seong Corp Bhd's 9MFY10 results were below consensus and its estimates, making up 39% and 37% of consensus and its FY10 forecasts respectively.
The research house said on Wednesday, Dec 1 the continuously poor performance was mainly due to delay in the commencement of the Gorgon pipe coating project by about two months due to changes in specifications.
th'However, we have reduced the target price for Wah Seong to RM2 (previously RM2.40) based on the existing PER of 14 times on FY11 earnings following our FY11 earnings downgrade. We believe the company is still supported by an orderbook of more than RM1 billion,' it said.
Company Name: WAH SEONG CORPORATION BHD
Research House: OSK
KUALA LUMPUR: OSK Research said Wah Seong Corp Bhd's 9MFY10 results were below consensus and its estimates, making up 39% and 37% of consensus and its FY10 forecasts respectively.
The research house said on Wednesday, Dec 1 the continuously poor performance was mainly due to delay in the commencement of the Gorgon pipe coating project by about two months due to changes in specifications.
th'However, we have reduced the target price for Wah Seong to RM2 (previously RM2.40) based on the existing PER of 14 times on FY11 earnings following our FY11 earnings downgrade. We believe the company is still supported by an orderbook of more than RM1 billion,' it said.
Tuesday, November 30, 2010
KINSTEL - Kinsteel's target price cut by OSK
Stock Name: KINSTEL
Company Name: KINSTEEL BHD
Research House: OSK
OSK says the surprise loss at Kinsteel's downstream operations and worse than expected loss from 37 per cent -owned Perwaja again let them down.
The loss was mainly attributed to the wide mismatch between higher raw materials costs vis-���-vis lower selling prices of steel products, OSK added.
As OSK expect the quantum of improvement anticipated for fourth quarter to be rather limited
It thus cuts estimates by 65.5 per cent for financial year 2010 and 13.2 per cent for financial year 2011. This translate into a lower target price of RM0.83
Company Name: KINSTEEL BHD
Research House: OSK
OSK says the surprise loss at Kinsteel's downstream operations and worse than expected loss from 37 per cent -owned Perwaja again let them down.
The loss was mainly attributed to the wide mismatch between higher raw materials costs vis-���-vis lower selling prices of steel products, OSK added.
As OSK expect the quantum of improvement anticipated for fourth quarter to be rather limited
It thus cuts estimates by 65.5 per cent for financial year 2010 and 13.2 per cent for financial year 2011. This translate into a lower target price of RM0.83
Friday, November 26, 2010
MSPORTS - Multi Sports Holdings sees normalised sales from new capacity
Stock Name: MSPORTS
Company Name: MULTI SPORTS HOLDINGS LTD
Research House: OSK
Multi Sports Holdings Bhd
(51 sen)
Maintain buy at 49.5 sen with lower target price of 87 sen (from 93 sen): While Multi Sports reported strong 9MFY10 revenue and core net profit ' revenue increased by 40.7% year-on-year (y-o-y) to RM203.4 million and 30% y-o-y to RM49.2 million ' its annualised full-year earnings of RM65.6 million, came in below our full-year estimate of RM75.7 million as we overestimated the production volume from new capacity on an annualised basis.
Compared with the strong sales growth of 57.5% (net profit +49.5%) y-o-y in 2QFY10, the group recorded a slower 17% top line y-o-y growth (net profit +3.2% y-o-y) in 3QFY10 as the group has added in extra capacity in 3QFY09, hence the 17% y-o-y growth in the current quarter is a normalised growth.
Multi Sports added five production lines for EVA MD in 3QFY09. Production volume continued to increase by 34% to 23.4 million in 9MFY10 (3QFY10: +14%) while the average selling price improved by 4.4% to RM18.9 (3QFY10: +2.2% y-o-y), mainly driven by the higher demand for EVA MD products.
9MFY10 earnings before interest and tax (Ebit) margin was lower at 28.3% against 33.7% in the previous year due to higher labour costs as the group revised wages upwards, administrative expenses and foreign exchange loss on fundraising from rights share issue which are recognised in the current quarter. The slower core earnings growth compared with top line growth was further explained by the higher interest expense incurred during this quarter on additional short-term loan drawdown.
We trim our FY10 and FY11 earnings forecast by 6.8% to 15% to factor in the lower production volume from new capacity on an annualised basis. We forecast the group will register flat profit in the next quarter due to capacity constraints. We are also expecting Multi Sports to register flat net profit in FY11 given the higher depreciation expense incurred for the new plant and higher effective tax rate of 25% against 12.5% currently. Our target price is reduced to 87 sen, based on 5.5 times FY11 EPS instead of FY10. The construction of its new plant on Xibin Land was completed in November and the group is targeting to move in completely by next month. ' OSK Investment Research
Company Name: MULTI SPORTS HOLDINGS LTD
Research House: OSK
Multi Sports Holdings Bhd
(51 sen)
Maintain buy at 49.5 sen with lower target price of 87 sen (from 93 sen): While Multi Sports reported strong 9MFY10 revenue and core net profit ' revenue increased by 40.7% year-on-year (y-o-y) to RM203.4 million and 30% y-o-y to RM49.2 million ' its annualised full-year earnings of RM65.6 million, came in below our full-year estimate of RM75.7 million as we overestimated the production volume from new capacity on an annualised basis.
Compared with the strong sales growth of 57.5% (net profit +49.5%) y-o-y in 2QFY10, the group recorded a slower 17% top line y-o-y growth (net profit +3.2% y-o-y) in 3QFY10 as the group has added in extra capacity in 3QFY09, hence the 17% y-o-y growth in the current quarter is a normalised growth.
Multi Sports added five production lines for EVA MD in 3QFY09. Production volume continued to increase by 34% to 23.4 million in 9MFY10 (3QFY10: +14%) while the average selling price improved by 4.4% to RM18.9 (3QFY10: +2.2% y-o-y), mainly driven by the higher demand for EVA MD products.
9MFY10 earnings before interest and tax (Ebit) margin was lower at 28.3% against 33.7% in the previous year due to higher labour costs as the group revised wages upwards, administrative expenses and foreign exchange loss on fundraising from rights share issue which are recognised in the current quarter. The slower core earnings growth compared with top line growth was further explained by the higher interest expense incurred during this quarter on additional short-term loan drawdown.
We trim our FY10 and FY11 earnings forecast by 6.8% to 15% to factor in the lower production volume from new capacity on an annualised basis. We forecast the group will register flat profit in the next quarter due to capacity constraints. We are also expecting Multi Sports to register flat net profit in FY11 given the higher depreciation expense incurred for the new plant and higher effective tax rate of 25% against 12.5% currently. Our target price is reduced to 87 sen, based on 5.5 times FY11 EPS instead of FY10. The construction of its new plant on Xibin Land was completed in November and the group is targeting to move in completely by next month. ' OSK Investment Research
GENM - OSK Research maintains Neutral on Genting Malaysia, higher TP RM3.24
Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Research House: OSK
KUALA LUMPUR: OSK Research said Genting Malaysia Bhd reported 9MFY10 earnings that were largely in line with its full-year estimates.
'We are maintaining our NEUTRAL recommendation but confer a higher TP of RM3.24 as we roll forward our valuations to FY11, although pegging the same 8x EV/EBITDA to its domestic casino business,' it said on Friday, Nov 26.
OSK Research said its fair value imputed a 10% discount on RNAV. The group's relatively attractive valuations of 6x EV/EBITDA vs the regional average of 10x will help to anchor its share price.
'Nonetheless, we continue to prefer its parent company, GENTING BHD [], as a proxy to Genting Singapore's more compelling growth story,' it said.
Company Name: GENTING MALAYSIA BERHAD
Research House: OSK
KUALA LUMPUR: OSK Research said Genting Malaysia Bhd reported 9MFY10 earnings that were largely in line with its full-year estimates.
'We are maintaining our NEUTRAL recommendation but confer a higher TP of RM3.24 as we roll forward our valuations to FY11, although pegging the same 8x EV/EBITDA to its domestic casino business,' it said on Friday, Nov 26.
OSK Research said its fair value imputed a 10% discount on RNAV. The group's relatively attractive valuations of 6x EV/EBITDA vs the regional average of 10x will help to anchor its share price.
'Nonetheless, we continue to prefer its parent company, GENTING BHD [], as a proxy to Genting Singapore's more compelling growth story,' it said.
Thursday, November 25, 2010
PETRA - OSK Research: Petra Perdana to break even by 4Q
Stock Name: PETRA
Company Name: PETRA PERDANA BHD
Research House: OSK
KUALA LUMPUR: OSK Research said PETRA PERDANA BHD []'s'' 9MFY10 results were within its'' expectations, with a cumulative net loss of RM53.1 million year-to-date.
'We expect the company to break even by 4QFY10, unless the monsoon season turns out worse than expected and cause some of its contracted vessels being put on hold,' it said on Thursday, Nov 25
OSK Research said the lower 3QFY10 net loss of RM23.7 million gave a good indication that the worst for the company may be over. The better q-o-q results were contributed by 1) higher utilization of vessels, and 2) lower mobilization costs during the quarter.
'Nevertheless, we think the share price may have hit bottom and hence are upgrading our call to Trading Buy, with a target price of 94 sen,' it said.
Company Name: PETRA PERDANA BHD
Research House: OSK
KUALA LUMPUR: OSK Research said PETRA PERDANA BHD []'s'' 9MFY10 results were within its'' expectations, with a cumulative net loss of RM53.1 million year-to-date.
'We expect the company to break even by 4QFY10, unless the monsoon season turns out worse than expected and cause some of its contracted vessels being put on hold,' it said on Thursday, Nov 25
OSK Research said the lower 3QFY10 net loss of RM23.7 million gave a good indication that the worst for the company may be over. The better q-o-q results were contributed by 1) higher utilization of vessels, and 2) lower mobilization costs during the quarter.
'Nevertheless, we think the share price may have hit bottom and hence are upgrading our call to Trading Buy, with a target price of 94 sen,' it said.
KNM - OSK Research maintains KNM target price at 56 sen
Stock Name: KNM
Company Name: KNM GROUP BHD
Research House: OSK
KUALA LUMPUR: OSK Research said KNM Bhd's 9MFY10 results were above consensus but within its expectations, making up 83% and 78% of the FY10 forecasts respectively.
It said on Thursday, Nov 25 the improvement in the 3QFY10 numbers showed that PBT soared 393% to RM41.0m q-o-q, mainly contributed by higher utilization of its plants as well as a better product mix.
However, on a YTD comparison, the 9MFY10 PBT was still lower by 77.4% due to lower selling prices and higher cost of operation.
The ex-date for the company's share consolidation of every four shares into one share has been set for Dec 2.
'Our target price for KNM remains unchanged at 56 sen, based on a PER of 9x FY11 EPS. In the immediate term, we believe there may be some upside to its share price once the shares are consolidated as worries over its liquidity would be successfully addressed by then.
'Going forward, we expect KNM's outlook to gradually improve in line with the recovery of the global O&G industry,' said OSK Research.
Company Name: KNM GROUP BHD
Research House: OSK
KUALA LUMPUR: OSK Research said KNM Bhd's 9MFY10 results were above consensus but within its expectations, making up 83% and 78% of the FY10 forecasts respectively.
It said on Thursday, Nov 25 the improvement in the 3QFY10 numbers showed that PBT soared 393% to RM41.0m q-o-q, mainly contributed by higher utilization of its plants as well as a better product mix.
However, on a YTD comparison, the 9MFY10 PBT was still lower by 77.4% due to lower selling prices and higher cost of operation.
The ex-date for the company's share consolidation of every four shares into one share has been set for Dec 2.
'Our target price for KNM remains unchanged at 56 sen, based on a PER of 9x FY11 EPS. In the immediate term, we believe there may be some upside to its share price once the shares are consolidated as worries over its liquidity would be successfully addressed by then.
'Going forward, we expect KNM's outlook to gradually improve in line with the recovery of the global O&G industry,' said OSK Research.
Monday, November 22, 2010
KOSSAN - Kossan to focus on higher-end exam gloves
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Research House: OSK
Kossan Rubber Industries Bhd will continue to focus on higher-end examination gloves, said OSK Research.
In its research note today, OSK said Kossan, in comparison with some of its peers, had gotten the head start by having the intention and putting the efforts to focus on the higher-end examination gloves such as the powder-free nitrile and surgical gloves.
"We understand the company will continue with efforts to upgrade its Chemax glove launched a few years ago, which yields higher product margin as well as look to producing surgical gloves starting from next year to further strengthen its presence in the higher-end examination glove market," it said.
OSK said Kossan has delivered a good set of results for the third quarter ended Sept 30, 2010.
"Its net profit was only down by 4.8 per cent quarter-on-quarter unlike some of its peers where their net profits were down between 17 per cent and 30 per cent during the corresponding period following the high latex prices and unfavorable exchange rate," it said.
For the third quarter ended Sept 30, 2010, Kossan's pre-tax increased to RM38 million from RM21 million in same quarter of 2009.
Revenue increased to RM276 million from RM210 million previously.
OSK said it would maintain its "buy" call on Kossan with the target price unchanged at RM5.25.
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Research House: OSK
Kossan Rubber Industries Bhd will continue to focus on higher-end examination gloves, said OSK Research.
In its research note today, OSK said Kossan, in comparison with some of its peers, had gotten the head start by having the intention and putting the efforts to focus on the higher-end examination gloves such as the powder-free nitrile and surgical gloves.
"We understand the company will continue with efforts to upgrade its Chemax glove launched a few years ago, which yields higher product margin as well as look to producing surgical gloves starting from next year to further strengthen its presence in the higher-end examination glove market," it said.
OSK said Kossan has delivered a good set of results for the third quarter ended Sept 30, 2010.
"Its net profit was only down by 4.8 per cent quarter-on-quarter unlike some of its peers where their net profits were down between 17 per cent and 30 per cent during the corresponding period following the high latex prices and unfavorable exchange rate," it said.
For the third quarter ended Sept 30, 2010, Kossan's pre-tax increased to RM38 million from RM21 million in same quarter of 2009.
Revenue increased to RM276 million from RM210 million previously.
OSK said it would maintain its "buy" call on Kossan with the target price unchanged at RM5.25.
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