Silverlake Axis: Time to cash out
Summary: Silverlake Axis Limited (SAL) has entered into a conditional
agreement to subscribe for a 30% equity interest in Unifisoft Holdings – a
financial services IT provider in China – for up to US$20.4m, or 21x
historical FY06 PER. SAL believes the investment will combine Unifisoft's
in-depth local market expertise and proven systems integration capabilities
with its own comprehensive range of core banking solutions to ride on the
vibrant PRC market. However on its own, potential contribution from
Unifisoft, at the associate level, may not be significant, just about a 4%
boost to our FY08 pre-tax profit estimate. But we think that the main
benefit is likely to come from leveraging on Unifisoft's network and
existing customers, hence we have bumped up our FY08 sales forecast by 7.3%
and our earnings by 9.2%. We are also revising up our fair value from
S$0.84 to S$0.94, now based on 20x FY08 EPS versus blended FY07/08
previously. However, the stock may have captured most of the good news at
current levels, especially after the 46% surge in price since our
initiation report in March. Hence we are downgrading our call to HOLD until
we see more concrete deals. (Carey Wong)
For more information on the above, visit www.ocbcresearch.com for detailed
report.
Genting International Public Ltd: GIL raises more fresh capital cash
Summary: Genting International Public Ltd (GIL) announced that it intends
to raise S$2.0-S$2.3bn in additional equity via a rights issue. The rights
issue is on the basis of 3 new shares for every 5 existing shares held. The
pricing of the rights will be determined after an extraordinary general
meeting to be held at a later date. GIL intends to use the funds raised for
the development of the Sentosa Integrated Resort (IR), repayment of debt
and for working capital. This cash call will be the third since GIL won the
Sentosa IR and if the current rights issue is successful, GIL would have
raised a total of S$3.18bn since January 2007. This means GIL would still
need to raise a further S$2.0bn to finance the Sentosa project which is
expected to cost GIL S$5.2bn in total. However, we expect the balance to be
debt financing. We maintain our S$0.86 fair value and HOLD rating and await
further developments in the U.K. gaming scene to reassess our rating and
fair value. (Winston Liew)
Singapore Press Holdings: Higher valuation for the Paragon
Summary: Singapore Press Holdings (SPH) released its yearly valuation
report for its Paragon property yesterday. Riding the positive sentiments
of the property boom, the Paragon has been revalued up 19.7% by Knight
Frank to S$1.82b. If we take into account this new asset valuation, it
would yield another S$0.19 to our valuation. However, the debt currently
financing the property stands at $594m as reported in SPH's 2Q07 financial
statements. Until we obtain a clearer picture on SPH's level of debt for
this property, we are inclined to maintain our target price of S$4.60 and
our HOLD rating for SPH. Meanwhile, SPH is releasing its 3Q results next
week on 11 July 2007. (Kelly Chia)
Singapore Telecommunications: Acquires another associate
Summary: Singapore Telecommunications Ltd (SingTel) announced that it has
acquired another mobile associate. This time it is Warid Telecom in
Pakistan and its 30% stake will cost US$758m. This is the second
acquisition in the India subcontinent in the last 2 years. The previous
acquisition was a 45% stake in Pacific Bangladesh Telecom for S$204m. Warid
is the third largest mobile operator in Pakistan and is presently loss
making. As such, we do not anticipate Warid to help boost SingTel's
earnings in the short to medium term. Nevertheless, the acquisition is
positive on SingTel and provides it with the additional potential for
growth if it can help to turn around and grow Warid. We retain our fair
value of S$3.32 and HOLD rating for now. (Winston Liew)
NEWS HEADLINES
- A consortium comprising of CapitaLand, Hotel Properties, Wachovia
Development Corporation and possibly a foreign fund is paying S$1.34b for
Farrer Court.
- NOL has ordered 8 large, high-speed container ships, each with a capacity
of 10,000 TEUs, worth US$1b. These ships will have the largest capacity in
their fleet.
- Yellow Pages is seeking for new candidates to serve on its board.
- One unit of SC Global's The Marq on Paterson Hill has been sold for a
record S$5,100.
- HK billionaire Lee Shau Kee, the 3rd largest shareholder in Suntec REIT,
is seeking to sell his entire stake of 75.1m units at S$1.995 to S$2.04
each, or as much as S$153m.
- Keppel Land has signed MOUs to develop a string of mega lifestyle
precinct projects in China.
- Territory Resources, an Australian mining company, may be offering a
takeover of rival Consolidated Minerals for A$849m (S$1b). Noble Group Ltd
has a 13% stake in Territory Resources.
- Scorpio East reported a 67% drop in net profit to S$806,000 for FY2007
(ended 30 April) due to a rise in operating cost.
Please refer to the full report for more information and additional
disclosures.
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