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The views & opinions expressed are the dealers' own and they do not represent the views of UOBKH. The content is written in their personal capacity and is in no way related or associated to UOBKH. Please read disclaimer page here.

Thursday, April 20, 2017

China Aviation Oil (CAO SP SP) | Buy sgd1.63 as event catalysts unfold

My view:

S'pore-Event-Driven-pick | China Aviation Oil (CAO SP SP) Px/Tgt SGD1.63/2.26

Theme:                Buy-sgd1.63-as-event-catalysts-unfold
               
1.        UOBKH has been having CONVICTION CALLS on CAO SP as follows:

        a.        BUY:                        Apr 2017                sgd1.63
        b.        Look to BUY:                Jan 2017                <sgd1.30  
        c.        Put-on-BUY-radar:        Oct 2016                <sgd1.30  
        d.        Take-Profit:                Aug 2016                sgd 1.50
        e.        Conviction Buy:         May 2016                sgd 0.99

2.        CAO SP event-catalyst are as follows:

        a.        Apr 2017:        UOBKH upgraded target SGD2.26 is at 2017 PE of 14x (vs peers at 18x)
        b.        Apr 2017:        Excellent 1Q17 results
        c.        2Q 2017:        Delay in possible utilisation of its USD220m cash for M&A (likely to take a stake in a European airport & do a similiar ops as Shanghai Pudong)

3.        UOB Kay Hian Research maintain BUY with target price raised to S$2.26 based on 14.4x 2017F PE, pegged at a 20% discount to peers' average PE of 18x. Catalysts include potential for future growth as the Shanghai airport builds a new terminal (aiming to be amongst the world's top three busiest airports in 2019 and the general China's civil aviation boom.

UOB Kay Hian Research issued a report dated today on the above topic. Please contact us for the full research analyst report.

Thanks & Regards
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Wednesday, April 19, 2017

Asia Plantation | Prefer S'pore-listed Bumitama (BAL SP) /Golden Agri (GGR SP)

My view:

Asia-Plantation-picks:

S'pore
1.        First Resource (FR SP) Px/Tgt SGD1.85/2.15
2.        Bumitama (BAL SP) Px/Tgt SGD0.72/1.25
3.        Golden Agri (GGR SP) Px/Tgt SGD0.35/0.44
4.        Wilmar (WIL SP) Px/Tgt SGD3.44/3.50

Indo
1.        Sampoerna Agro (SGRO IJ) Px/Tgt IDR2,000/2,300
2.        Astra Agro (AALI SP) Px/Tgt IDR14,700/19,000
3.        London Sumatra (LSIP IJ) Px/Tgt IDR1,390/1,780

Malaysia
1.        Genting Plantations (GENP MK) Px/Tgt MYR11.18/10.55
2.        KL Kepong (KLK MK) Px/Tgt MYR24.00/23.80
3.        Sarawak Oil Palm (SOP MK) Px/Tgt MYR3.46/3.40
4.        Sime Darby (SIME MK) Px/Tgt MYR9.28/8.65
5.        IOI Corp (IOI MK) Px/Tgt MYR4.45/3.85
6.        IJM Plantation (IJMP MK) Px/Tgt MYR3.10/3.00

Theme:                Selective-BUYs-on-S'pore-listed-Plantations

1.        UOBKH Research maintain Asia Plantation sector at OVERWEIGHT:

        a.        Since our last BUY call in Nov 16:S'pore CPO sector volatile +20%/-20%; (Indo/Mal CPO flat or +5%)
        b.        Asia Plantation sector saw CPO price see-sawed:

                i.        Sep 13:                RM2,300/tonne
                ii.        Mar 14:                RM2,900/tonne
                iii.        Aug 14:                RM1,900/tonne
                iv.        Oct 14:                RM2,200/tonne
                v.        Jan 15:                RM2,300/tonne
                vi.         Jun 15:                RM2,200/tonne
                vii.         Jan 16:                RM2,400/tonne
                viii.        Jul 16:                RM2,400/tonne
                ix.        Nov 16:                RM2,900/tonne
                x.        Apr 17:                RM2,600/tonne
     
2.        Despite the above, looking ahead, I am of the view that this sector is likely to be re-rated upwards as our CPO assumptions has formed a strong base: 2017 at RM2600/tonne & 2018 at RM2500/tonne (vs current RM2,600/tonne), focusing on S'pore/Indo Plantation on the back of:

        a.        Lower inventory
        b.        Slower production at 5% vs 6% previously
        c.        Demand better-than-expected
        d.        Bio-diesel blending from current 5% to future 7.5%

3.        I am already seeing cash-flushed Investors continue nibbling on Asia Plantation sector & the picks thus far has been BAL SP & GGR SP on stock-specific catalyst. I am pretty confident they will follow up with more BUYs on the other S'pore/Indo/Mal Plantation-plays. FM BUY inflows continue (given recent share price fall) because they are expecting reversing up CPO prices because a) soybean planting down, b) stabilising oil prices at <USD55/bbl.

4.        UOBKH Research maintain regional plantation sector at OVERWEIGHT after adjusting our earnings forecasts to reflect our new CPO ASP assumptions. We maintain the plantation sectors in Malaysia to MARKETWEIGHT; OVERWEIGHT S'pore & Indonesia. We still like companies with younger tree age and efficient management that will ensure high productivity, which translates into higher production growth. SELL IJM Plantations. BUY S'pore-listed Plantations i.e. BAL, GGR, FR

5.        Our CPO assumptions:

        a.        2017:                RM2,600/tonne
        b.        2018:                RM2,500/tonne

6.        My BUY Strategies for the sector are: a) buy the largest plantation landbank owners (Sime Darby <myr9.00), and b) buy plantation companies with strong production growth (London Sumatra, First Resources, Bumitama and Sampoerna Agro)  c) BUY highest correlation to CPO price (GGR, BAL, FR).

7.        I am of the view that CPO price is expected to gain momentum on the upside as concern over high palm oil inventory levels subsides. Given the likely CPO price turnaround to an uptrend momentum, we raise our sector valuations (refer to the Valuation section). For sector exposure, we prefer:

        a.        Young and efficient upstream players: First Resources and Bumitama Agri.
        b.        Integrated players with catalysts: Wilmar for its earnings recovery and IOI Corp for the upside from the proposed demerger of its property unit.
        c.        High beta to CPO prices: Golden Agri, Indofood Agri and Sampoerna Agro.



UOB Kay Hian Research issued a report dated today on the above topic. Please contact us for the full research analyst report.

Thanks & Regards
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Monday, April 17, 2017

Singapore O&G (SOG SP) | Outperformed +70%; another +13% ahead

S'pore Healthcare Pick | S'pore O&G (SOG SP) Px/Tgt SGD1.36/1.53 (+13%)
Theme: Share-price-80cts-to-sgd1.36-&-up-our-target-to-SGD1.53
               
My View:

1.        Share price has outperformed +70%; another +13% upside ahead:

        a.        Jun 16 initiation:        SGD 0.80                @ attractive 3% yield
        b.        Apr 17:                       SGD 1.36


2.        UOBKH Research  has a continued BUY with upgraded target price of SGD1.53 (from SGD1.48). With the recent incorporation of the paediatrics subsidiary, we expect the new service to commence in 2H17, via either an organic expansion or potential acquisition. We view the move positively as paediatrics is a complementary vertical offering to SOG's value chain, supported by a strong and growing O&G pillar. Meanwhile, dermatology and cancer segment continues to register good performance and will likely see stronger momentum in FY17.

UOB Kay Hian Research issued a report dated today on the above topic. Please contact us for the full research analyst report.

Thanks & Regards

Any expression of trading idea found on this website is for sharing only and does not constitute an invitation to trade or investment advice. Please read disclaimer page here.

Tuesday, April 11, 2017

KSH Holdings KSHH SP | Outperformed +40%; further +50% upside ahead

S'pore-Event-Driven-pick:

KSH Holdings (KSHH SP) Px/Tgt SGD0.77/1.18         (+53%)

Theme:                Share-55cts-to-77cts-&-up-our-target-to-sgd1.18
               
My View:

1.        Share price has outperformed +35%; another +50% upside ahead:'

        a.        Jun 16 initiation:        sgd 0.55                @ attractive 6% yield
        b.        Apr 17:                        sgd 0.73
        c.        mid-Apr 17:                sgd 0.77


2.        UOBKH Research reiterates BUY with new SOTP target price of S$1.18. To better appreciate the intrinsic value now that the Gaobeidian project has taken off, a SOTP methodology would be more suitable to value KSH. Maintain BUY and raise our target price to S$1.18.

UOB Kay Hian Research issued a report dated today on the above topic. Please contact us for the full research analyst report.

Any expression of trading idea found on this website is for sharing only and does not constitute an invitation to trade or investment advice. Please read disclaimer page here.

Singapore REITs | Value-added REITs pick; & I still prefer CACHE SP


My view:

S'pore REITs:

1. Given that UOBKH Research cuts-&-dice the various angles/valuations of S'pore REITs prospects, I am still of the view that the most attractive S'pore REITs is:

        a. CACHE SP:
               i. Investors go for yield (not capital gain) given a risk-aversion profile
               ii. At 8.5%, it is the highest yield among the SREITs peer that we cover (double your money in 8 years; or tax-free sgd85k p.a. for every sgd1 million invested)
               iii. Although CACHE SP has outperformed from 80cts base to 88cts; I would be a strong BUYER near 80cts

2. UOBKH Research examine the value-add REIT managers bring to the table after charging unitholders base and performance fees for managing assets held.

3. Fortune REIT, MCT, Frasers Commercial Trust, FCT, CRCT and CCT offer unitholders the best value proposition for fees charged, ranking among the lowest in terms of average fee per assets under management over average DPU and NAV growth.



UOB Kay Hian Research issued a report dated today on the above topic. Please contact us for the full research analyst report.

Thanks & Regards
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here.

Declout (DLL SP) | Share price likely turning up from historical low

My view:

1.        DLL SP has disappointed many investors since it was listed at 23cts in Oct 2012 & has broadly traded below IPO price over last 4 years. Its now 16.6cts

2.        We reckon that DLL SP near its current low of 16.6cts has limited downside & the BUY Catalysts are:

        a.        PB 0.9x; trading 42% below if historical average PB ratio
        b.        Likely share buy back
        c.        3-4 profit-accretive acquisitions in 2017
        d.        Declout's listed subsidiary Procurri (PROC SP) (also similaryly underperformed its 56cts IPO; now 35cts) likely 3x net profit before 2019
        e.        Next huge harvest target 2Q18

Thanks & Regards

Any expression of trading idea found on this website is for sharing only and does not constitute an invitation to trade or investment advice. Please read disclaimer page here.

Thursday, April 06, 2017

KSH Holdings (KSHH SP) | +35% share price spike likely due to new special economic zone in China

S'pore-Event-Driven-pick:

KSH Holdings (KSHH SP) Px/Tgt SGD0.73/0.69 (Target price to be reviewed)

Theme: Share-price-spike-from-sideway-55cts-to-73cts 

My View:

1. Share price has outperformed +35%: 

       a. Jun 16 initiation: sgd 0.55 @ attractive 6% yield
       b. Apr 17: sgd 0.73

2. This one-day share price spike likely to do with:

       a. KSH having a 22.5% stake in a development project in Gaobedian China that is near China's recently announced New Special Economic Zone (NSEZ) in the province of Hebei's Xiongxian, Anxin & Roncheng cities.
       b. This new NSEZ is to promote integration between Beijing & Tianjin.
       c. According to media reports this new NSEZ has the same importance as Shenzhen & Pudong

Any expression of trading idea found on this website is for sharing only and does not constitute an invitation to trade or investment advice. Please read disclaimer page here.

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