Tuesday, April 29, 2014

OCBC Report 29 Apr 14

KEY IDEA

Raffles Medical Group: Strong track record continues

Raffles Medical Group (RMG) reported its 1Q14 results, with both revenue and PATMI increasing by 8.0% YoY to S$87.6m and S$14.6m, such that topline and bottomline formed 23.0% and 21.4% of our FY14 forecasts, respectively. This is within our expectations as 1Q is seasonally RMG’s weakest quarter. RMG has started construction of its commercial building at Holland Village and is finalising the development plans for its Raffles Hospital extension. It is also in continued negotiations with its partners on working out the details for two separate greenfield hospital development projects in China. We keep our forecasts intact and expect RMG to record revenue and core PATMI growth of 11.7% and 12.1% in FY14, respectively. Rolling forward our valuations to 30x blended FY14/15F EPS, we derive a higher fair value estimate of S$3.90 (previously S$3.6Cool. Maintain BUY. (Wong Teck Ching Andy)


MORE REPORTS

Hutchison Port Holdings Trust: Boost from divestment gain
HPHT reported 1Q14 PATMI of HK$558.9m (EPU: 6.42 HK-cents), which increased 47.0% YoY mostly due to a one-time HK$243.8m gain from the divestment of a 60% stake in ACT. Accounting for this impact, we estimate that 1Q14 PATMI would have constituted 24.1% of our full year forecast, which we judge to be mostly within expectations and consensus. 1Q14 revenues came in at HK$2944.5m, up 2.7% due to ACT’s contributions (acquired in Mar-13), a 1.9% YoY increase in YICT’s throughput and higher average revenue per TEU for HIT and YICT, but partially offset by HIT’s throughput dipping 6% YoY. The trust also reported an uptrend for outbound cargoes to the US and the EU – a major factor determining total container volume handled by HPHT – and management notes that growth outlooks in the US and the Eurozone remain favorable. We update our valuation model for the latest data-points and our fair value estimate increases marginally to US$0.68 from US$0.63 previously. Maintain HOLD. (Eli Lee)

Midas Holdings: Won high-speed train car orders worth CNY146m
Midas Holdings announced last evening that it has secured contracts for high-speed train car body components from CNR Changchun Railway Vehicle Co. Ltd (subsidiary of China CNR) worth CNY146m. Under the terms of the contract, Midas will supply aluminium alloy extrusion profiles and certain fabricated parts for high-speed trains which will operate at speeds of up to 350 km/h. Delivery is slated for 2014. We believe this is part of China Railway Corporation’s (CRC) second round of high-speed train car tender, of which Midas has already won CNY318m of orders (announced on 7 Apr 2014) from CNR Tangshan Railway Vehicle Co. Ltd (another subsidiary of China CNR). The combined value of these contracts amounts to CNY464m, and comes ahead of our CNY325-380m expectation. YTD, Midas has clinched CNY536.9m of orders. We expect the market to react positively to this latest news. Maintain BUY with S$0.66 fair value estimate on Midas.(Wong Teck Ching Andy)

Vard Holdings: 1Q14 results below expectations
Vard Holdings Limited’s (VARD) 1Q14 revenue declined slightly by 2.7% YoY to NOK2.67b, or 21.3% of our FY14 forecast. PATMI slumped 51.1% YoY to NOK92m, forming just 15.5% of our full-year estimate. Although we expect a much stronger 2H, this set of earnings still came in below our expectations. We believe VARD’s Brazilian shipyards continued to rake in losses during the quarter. On a positive note, VARD managed to secure a very large order intake of NOK5.53b (eight vessels) in 1Q14, thus boosting its order book value to NOK21.84b as at 31 Mar 2014. Nevertheless, management cautioned that this round of order wins should be considered as exceptional. We will provide more details after the analyst briefing later. Our Hold rating and S$0.84 fair value estimate is under review. (Wong Teck Ching Andy)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- The US stock market finished Mon’s session generally higher, after the main indexes swung wildly between gains and losses.

- Growth across Asia should remain steady at around 5.5% overall this year and the next, as advanced economies "turn the corner" towards recovery and fuel global demand, the IMF said.

- Ho Bee Land's first-quarter net profit tumbled 92.1% to S$4.1m from S$52.1m a year ago.

- Grand Banks Yachts has taken a significant step towards being removed from the watch-list of Singapore Exchange.

- Sapphire Corp's shares defied the stock market's general bearish tone yesterday, jumping 38% on news that it was selling its entire flagging steel business in China for S$70m.

- Aspial Corporation continues to expand its presence in Australia with its third Melbourne property purchase this year.

- Fraser and Neave has acquired a 70% interest in Yoke Food Industries Sdn Bhd for RM54.6m (S$21m).

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