Summary: We met with WesTech Electronics Limited's (WesTech) management recently for a brief update on its developments. WesTech is also slated to announce its FY07 results in the last week of Feb 08. We expect WesTech to attain a 45.8% YoY jump in FY07 net profit to S$8.8m on the back of a 18.2% gain in turnover to S$390.2m, with its Display Technology (DT) division contributing a significant portion. Aside from the upcoming Beijing Olympics in Aug 08, management believes that another positive trend for its DT business is the official switch from analog to digital broadcasting in the United States as of 17 Feb 09. However, we are a bit more cautious about the outlook of its electronic components distribution and system & equipment division, given the concerns of a possible recession in the US. Nonetheless, we remain optimistic about its growing DT business. With an expected 6.4% dividend yield for FY08 on the cards, we retain our BUY rating and maintain our fair value of S$0.40, based on 1x FY08F NTA. (Brandon Lee)
For more information on the above, visit www.ocbcresearch.com for detailed report.
Lion Teck Chiang Ltd: Update on profit warning
Summary: Lion Teck Chiang Ltd (LTC) issued a profit warning for its 1H08 results recently. We met with management yesterday to obtain clarification on the matter. LTC is making a provision pertaining to its steel division in accordance to accounting standards. LTC is impacted by the volatility and upward trend of steel prices and hence provided for all "unrealized losses" - the difference between the average cost per ton of stocks and committed purchases of steel and the selling price per ton, for each outstanding sales contract. Steel prices have risen from approximately US$440/ton in Jan to US$585/ton by Dec 07 and US$690/ton by Jan 08. Noteworthy is that this provision is the worst-case scenario as at 1H08 since any "unrealized profits" are excluded. In addition, this provision is a non-cash item that does not impact cashflow. LTC's cash balance as at 30 Jun 07 was a healthy $12.3m, of which there was an increase in cash of S$7.2m for FY07. As LTC is releasing its 1H08 results on 4 Feb, it is currently in the blackout period and we were not able to assess the financial impact of the provisioning. Once the amount is known next week, we would review our earnings estimates. Till then, we are suspending our rating on the stock. (Selena Leong)
NEWS HEADLINES
- Keppel Land posted a 7-fold rise in 4Q net profit to S$572.3m, driven by strong home sales and property divestment gains. Revenue hit a record S$1.4b or a 48.5% YoY gain. It also announced that it would delay the launch of Marina Bay Suites, citing "market conditions".
- China Sky Chemical Fibre will acquire Qingdao ZhongDa Chemical Fibre for RMB450m.
- SIA Engineering reported a 3.1% drop YoY in 3Q net profit to S$53.6m, with revenue growing 1.1% to S$248.6m.
- Singapore has signed open sky agreements with Denmark, Norway and Sweden that allow their respective airlines, including SIA, unlimited access to each other's markets.
- Fortune REIT announced distribution income of HK$284.8m for 2007, up 3% from a year ago, with DPU for the year rising 2.5% to HK$0.3512.
- SGX has cleared US$4.7b worth of trades in the oil derivates market in 2007 – a 12-fold increase in value – through SGX AsiaClear.
- Pan-United Corp has been awarded 2 contracts worth a combined S$30m to supply ready-mixed concrete for Singapore's new MRT downtown line Stage 1.
- Rokko Hldgs reported FY07 revenue at S$33.3m, up 11.1% YoY; while net profits gained 18.3% to S$5.1m.
- Wee Hur Hldgs will debut on the SGX Mainboard today. It IPO was 1.4x subscribed
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment