Summary : Although MobileOne's (M1) 4Q07 revenue of S$206.9m (+2.9% YoY, +3.3% QoQ) came in 16.5% ahead of our forecast of S$177.6m, net profit of S$37.9m (-4.8% YoY, -13.1% QoQ) fell about 9.4% from our S$41.9m estimate, damped by higher cost of sales. For the full year, M1 posted a 3.9% YoY rise in revenue to S$803.3m and a 4.4% increase in net profit to S$171.8m. M1 also declared a final dividend of S$0.083, bringing the total dividend to S$0.108. Going forward, M1 believes its operations should enter a "steady state", where it should be able to maintain its EBITDA margin at 45-46% as well as a payout ratio of at least 80%. Thanks to its fairly resilient business and high payout ratio, we continue to like M1 as a defensive stock, especially in the current volatile market. We maintain our S$2.33 fair value and BUY rating. (Carey Wong)
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China Oilfield Technology: Stock battered but fundamentals unshaken
Summary : We visited China Oilfield Technology (COT) recently and believe the potential for enhanced oil recovery and COT's core business remains more than intact because of the mismatch between China's strong and growing demand for oil and its peaking domestic supply. COT has successfully delivered its RMB 100m order book for 4Q07, which is in line with our projection. We also expect to see more order visibility for FY08 as the year progresses. With its expertise in its core business and a strong asset base, we believe COT can sustain growth by 1) expanding its portfolio of services or 2) entering into a strategic alliance. We believe COT's fundamental story remains compelling, which is why we are maintaining our fair value estimate of S$1.01. COT is currently trading at S$0.49 or 52% below our fair value estimate. We reiterate our BUY rating. (Meenal Kumar)
For more information on the above, visit www.ocbcresearch.com for detailed report.
S-Shares: Boost from liquidity influx
Summary: China has recently signed a MOU that will allow its banks to invest in Singapore investments including stocks. This long-awaited move frees up an estimated S$23.2b pool of funds that could potentially be pumped into locally listed stocks. We expect this potential influx of liquidity to spark an upward re-rating of S-Shares. In our strategy report dated 14 December 2007, we highlighted our stock picks among the S-Shares universe. We continue to favour the China consumer sector for its ability to leverage on China's strong consumption growth, and the Manufacturing sector for its strategic advantage of having a low cost manufacturing base. Our stock picks remain as: Cacola Furniture International Ltd (BUY, fair value estimate of S$0.75), Man Wah Holdings Ltd (BUY, S$0.99), China Sports International Ltd (BUY, S$2.48), and Pacific Andes Holdings Ltd (BUY, S$0.87) for the consumer sector, and Bright World Precision Machinery Ltd (BUY, S$0.76), Dutech Holdings Ltd (BUY, S$0.535), Midas Holdings Ltd (BUY, S$1.85) and Midsouth Holdings Ltd (BUY, S$0.90) for the manufacturing sector. (Lee Wen Ching)
NEWS HEADLINES
- CapitaCommercial Trust posted a 53% YoY jump in FY07 distributable income to S$120.4m and 19% gain in DPU to S$0.087, due to consolidation of its 60% interest in the Raffles City complex and higher rental, car park & other income from its properties.
- GuocoLeisure posted a 464% YoY surge in 2Q08 net profit to S$15.8m and 31% gain in revenue to US$134.8m, attributable to better occupancy & room rates from its Thistle hotel chain in UK, higher sales of properties in Fiji and the strong British pound.
- BH Global Marine registered a 56% YoY gain in FY07 net profit to S$17.5m and 39% increase in revenue to S$81.9m, helped by regional strong demand for its products & services.
- Dayen Environmental Limited has secured two contracts totaling S$4.1m from the Public Utilities Board.
- Hyflux Ltd has clinched three municipal water treatment plant projects in China totaling some S$41m in investments.
- Bio-Treat Technology is raising funds of up to S$303m in notes, warrants and a loan from Precious Wise Group to fund projects and redeem its convertible bonds. Also, it entered into a securities purchase agreement with Abax Lotus for RMB434m in notes and warrants.
- Vita Holdings Ltd's major shareholder Winstedt Chong Thim Pheng upped his stake from 29.74% to 36.05%, triggering a mandatory conditional cash offer for the remaining shares.
Please refer to the full report for more information and additional disclosures
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