Straits Asia Resources (S$3.35) - Thermal coal prices reaching new
heights
We are raising our benchmark thermal coal price assumptions to
US$100/tonne
(+US$10/tonne) for FY08, US$90/tonne (+US$10/tonne) for FY09and
US$80/tonne
(+US$10/tonne) for FY10 onwards. This follows last week's jump in
Barlow Jonker
spot pricing to US$122.4.tonne (+23.8/tonne, +4.1%), and this week's
news of
further weather-related problems in Australia. We have adjusted our
assumed
pricing for Straits Asia to account for benchmark coal quality (6,000
kcal/kg GAR
for Sebuku, 5,600 kcal/kg GAR for Jembayan) and for FY08 forward sales.
Following
this upgrade, our FY08-09 EPS for Straits Asia increase by 13-16% and
our
DCF-based target price rises to S$4.32 (previously S$3.57). This offers
28%
upside from the company's current share price, which is below the 37%
upside to
our STI target of 4,100. However, we maintain our Trading Buy
recommendation
given further possible earnings upgrades following yesterday's
announcement of
sizeable upgrades in Straits Asia's coal resources.
Quick Takes
* Coal Sector - Outlook remains strong
* Tat Hong Holdings (S$3.09) - 3QFY08 results - Head and
shoulders above
* Bukit Sembawang (S$8.96) - 3QFY08 results - Looking to time
the market
* StarHub (S$3.12) - 4QFY07 results - ARPU growth story
unfolds
* Rotary Engineering (S$0.93) - Arabian knight
Corporate News
* DBS appoints Richard Stanley as new CEO
* China XLX completes construction of power generation systems
* Sincere Q3 profit more than doubles
* CitySpring's Q3 DPU of 1.6cents beats projections
Trading Ideas
No comments:
Post a Comment