Excerpts from latest analyst reports…..
CIMB says MENCAST is an ‘undiscovered gem’
Analyst: Gary Ng
What happened? Recently, we caught up with Mr Glenndle Sim, CEO of Mencast. Share price has just started climbing over the last one month. We came away thinking that this is perhaps one of the cheapest, if not the cheapest Offshore & Marine counter out there. It stays cheap simply because no one has actually take notice of the baby eagle chick yet. But we wonder how long can this undiscovered gem stay cheap before share price pop?
What we think. (1) Despite being an SME, we are in awe of how the group is able to secured probably the last property in Singapore at Penjuru Road, (2) Smart money in the like of Gay Chee Cheong; (3) accretive acquisitions and alliance with Becker Marine Systems will quantum-leap the usual profit the group used to see; (4) with enhanced business and earnings visibility, strong dividend yield will further galvanise stock price.
What you should do. Be invested! We do not think the stock price will hover at this level for long as management of Mencast was visited by various investors and analysts on the street wanting a piece of the action.
This stock is only at the growth stage, and has not scale the high wall of valuation (peers trading at in excess of 10x CY12 P/E). It will climb, and a further re-rating will propel the multiples further with an upgrade to mainboard from its current board (Mencast has been listed on Catalist for almost three years now).
Recent story: MENCAST: After record 2010 profit, will there be encore in 2011?
UOB Kay Hian expects ‘significant profit growth’ by SINO GRANDNESS
Analyst: Brandon Ng, CFA
Outlook remains positive for SGF as it leverages on the beverage segment as one of its growth drivers. The company has successfully launched its new products, loquat and pear (枇杷雪梨) juice and a cool loquat (冻枇杷) drink, and we expect sales to accelerate in 2QFY11 and 3QFY11 as demand for juices will strengthen during summer.
With lower raw material costs for both the processed food and beverage segments, gross profit growth is expected to be significant in FY11.
Earnings revision
We maintain our FY11 revenue and net profit forecast of Rmb846.0m and Rmb147.6m respectively and hold our horses until the 1QFY11 earnings are announced. We expect the stock to enjoy a re-rating or earnings upgrade if the company delivers a strong set of quarterly results.
Valuation/Recommendation
We maintain our target price at S$0.79, or 7.3x FY11F PE, pegged at a 35% discount to Singapore-listed peers’ average. Currently, the stock is trading at 6.5x FY10 PE. Reiterate BUY.
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SIAS Research upgrades TECHNICS intrinsic value to $1.30
Analyst: Ng Kian Teck
Technics Oil & Gas Limited (Technics) posted another sparkling set of quarterly results last week, with 2Q revenue rising 32% YoY to S$35m and net profit to equity holders (PATMI) soaring 66% YoY to S$5.4m.
1H revenue and PATMI were in line with our bullish estimates, forming 46% and 48% of our FY11 forecasts respectively.
The company also declared an interim dividend of 3 S cents a share, bringing total dividend for the financial period thus far to 9 S cents a share (inclusive of a 3 S cents special dividend).
Taking into account the recent Taiwan Depository Receipts and share buyback activities, we are upgrading our intrinsic value to S$1.30 per share. Maintain Increase Exposure.
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