Thursday, June 5, 2014

OCBC Report 5 Jun 14

KEY IDEA

Thai Beverage PLC: Likely to ride through Thai unrests

We maintain our view that the current political unrest’s impact on Thai Beverage PLC (ThaiBev) be only a slight dent on near-term revenue growth (5.2% in FY14F; 6.3% in FY15F) unless the protest ground widens beyond Bangkok. First, the political unrest is mainly limited to Bangkok, whereas ThaiBev’s sales takes place in every province in Thailand. Second, ThaiBev’s defensive alcoholic portfolio will provide shelter against economic contraction triggered by political uncertainty. Third, proportional accounting (vs. current equity accounting) of F&N and FCL revenues would reduce ThaiBev’s underlying exposure to Thailand by an estimated 12.6ppt to 83.6% based on 1Q14 figures. Historically during FY08-FY13 where political unrests are the norm, spirits segment’s revenue consistently grew by 7.3%-16.6%, thereby displaying growth resilience. We re-iterate BUY with S$0.74 fair value estimate. (Yap Kim Leng)


MORE REPORTS


Midas Holdings: JV NPRT clinches CNY3.5b metro contracts

Midas Holdings (Midas) announced that its 32.5%-owned JV Nanjing SR Puzhen Rail Transport (NPRT) has clinched three metro train contracts with an aggregate value of CNY3.5b. This bumps up NPRT’s YTD contract wins to CNY4.6b. The first order is worth ~CNY1.5b for the Suzhou Rail Transit Line 4 and Branch Procurement Contract, with delivery slated between 2015 and 2017. The second contract is worth ~CNY0.9b for the Hefei Rail Transit Line 1 Phases 1 and 2, with delivery scheduled from 2015 to 2016. The last contract is for the Hangzhou Metro Line 4 Phase 1 Stock Procurement contract and is worth ~CNY1.1b, with delivery slated from 2014 to 2017. As Midas is also a key supplier of aluminium extrusion profiles for NPRT, we believe this may also lead to future contract wins for Midas. Maintain BUYon Midas, with an unchanged fair value estimate of S$0.61, pegged to 1.2x FY14F P/B. (Wong Teck Ching Andy)


Vard Holdings: Secures NOK800m contract

Vard Holdings Limited (VARD) announced that it has secured a contract for the design and construction of one Offshore Construction and Anchor Handling Vessel worth NOK800m for Rem Offshore. This is VARD’s fifth order win since the start of 2Q14 and brings its YTD order wins to an estimated ~NOK8.2b. This latest vessel will be built in accordance to VARD’s internal design, with delivery scheduled in 1Q16 from one of its Norwegian yards. It has a bollard pull of 400 tons and has the ability to meet the demanding operations in the deepwater segment and winterised zones. We believe this contract win is a testament to VARD’s strong shipbuilding capabilities within the high-end specialised support vessels segment. Our last rating on VARD was a HOLD with a S$0.97 fair value estimate and we will be reviewing our recommendation. (Wong Teck Ching Andy)

SGX: New framework for secondary listing

Singapore Exchange (SGX) is proposing a new regulatory framework for secondary listing on the exchange.  Under the proposed framework, the regulatory oversight for secondary listings is with the regulator of the exchange where the company has its primary listing. This applies to 23 Developed Markets, and SGX will not impose additional listing obligations. As this is in the consultation phase, no timing for implementation has been given yet. If implemented, this should help to widen the number of listed companies on the local exchange and also enhance the trading activities on the local bourse. However, as observed from most current secondary listings, the bulk of the trading activity for a company is still largely confined to its primary listing exchange.  We do not see any near to medium term impact for now. We currently have a HOLD on SGX with a fair value estimate of S$7.22.  (Carmen Lee)

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


NEWS HEADLINES


- The S&P 500 Index rose by 0.19% to close at 1,927.88 on 4 Jun 2014 as the ISM Non-manufacturing Index rose to 56.3 for the month of May and beat the street’s expectations.


- Australia’s GDP increased to 1.1% in 1Q14, higher than 0.8% in 4Q13.

-Tritech Group has been awarded a S$6.099m contract for the Instrumentation and Monitoring of Thomson Line by the Land Transport Authority.

- Tat Hong Holdings announced that the group has divested its holding of 31.27% interest in Kian Ho Bearings Ltd to Raffles United Pte Ltd for a consideration of S$17.2m.


- CapitaLand announced that it now owns 92.7% of CMA’s issued share capital, and hence CMA’s shares will be suspended from trading after the close of the offer on 9 Jun 2014 unless extended.

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