Excerpts from latest analyst reports.....
OCBC says BIOSENSORS is its preferred pick of healthcare stocks
Analyst: Wong Teck Ching Andy
Under our Healthcare sector coverage, both Raffles Medical Group (RMG) and Biosensors International Group (BIG) continued to deliver YoY revenue and earnings growth during the recently concluded 2QCY12 results period, although the former’s PATMI was slightly below our expectations.
Looking ahead, we believe that the strong balance sheets of RMG and BIG (net cash of S$63.9m and US$306.7m, respectively) would allow them to bolster their expansion plans despite the ongoing macroeconomic uncertainties.
In our view, the major risk for the Healthcare sector stems from margin pressure, arising from higher manpower and consumables costs and mandatory price cuts for drugs and stents.
Nevertheless, we believe that RMG and BIG would be able to meet our expectations for core earnings growth of 11.7% and 25.0% respectively, for their current fiscal year.
Maintain OVERWEIGHT on the Healthcare sector, with BIG [BUY; FV: S$1.81] remaining as our preferred pick.
Recent story: @ BIOSENSORS AGM: "Company in high growth, no plan for dividends"
Lim & Tan Securities highlights moves by Hi-P's customers Amazon and Apple
Hi-P’s new customer Amazon will be holding a press conference on 6 Sept ’12 and analysts are anticipating the company to announce an upgrade to the company’s Kindle Fire e-reader to incorporate more functions, better resolution and a slightly bigger screen to enable movie viewing.
A more attractive price point is also expected.
We understand that Hi-P has recently started to produce components for Amazon’s new Kindle Fire tablet computer and will gradually be progressing from just components to modules which will offer better profit margins.
Hi-P’s major customer Apple will also be launching the new iPhone 5 smart phone on Sept 12.
We are expecting new customers and products to drive Hi-P’s 2H 2012 performance boosting their bottom-line to $60mln, up from $16mln last year and loss of $583,000 in 1H 2012.
The market has also taken notice of the company’s improving prospects, helping the stock rise 34% since the company’s 2Q ’12 result release on 1 Aug ’12.
While we continue to like the stock, we note the technical resistance at the $1 - 1.03 level which is the high reached in Feb-Mar this year.
Shorter-term investors may want to lock in some profits if the stock were to retest these levels.
Recent story: YONGNAM, HI-P INTERNATIONAL, DBS: What analysts now say....
DMG recommends k1 Ventures shareholders reject privatisation offer
Analyst: Goh Han Peng
GKB Holdings, the investment vehicle set up by major shareholders of k1 Ventures to undertake the privatisation of k1 Ventures, has, as of 15 August 2012, received valid acceptances amounting to 283m shares, or 13% of the outstanding shares.
Together with GKB’s existing 62% which were tendered for the offer, the group has now received valid acceptances for 75.4% of the outstanding shares.
One of the conditions for the offer was valid acceptances of 90% of the outstanding shares, failing which the offer will lapse.
Following an earlier extension of the offer period, the offer will expire next Wednesday, ie 29 August 2012.
We continue to believe that GKB’s offer of S$0.135/share substantially undervalues the stock, representing a discount of 50% to our revised NAV of S$0.27/share.
We are optimistic of the prospects for the group’s key investee companies, such as the 12.2% stake in Knowledge Universe Holdings, the largest preschool chain in the United States with a meaningful international presence in overseas markets in the United Kingdom, Singapore and Malaysia.
Of k1’s original US$56m investment cost, it has to date received over US$51m in distributions, reducing its holding cost to US$5m.
Similarly, Helm Holdings, its rail equipment leasing business in the U.S., is poised to ride an uptrend in equipment utilisation and rate uplift.
We believe the independent financial advisor for the offer, in using historical book values to value key investments such as KUH , Helm and China Grand Auto, does not fairly reflect the private market values of these investments.
Steven Green, CEO of k1, seems to agree with us. If the offer succeeds, he will be the biggest beneficiary with his stake raised from the current 14% to 42.8%.
We recommend to reject the offer.
Recent story: k1 Ventures offer price way below analyst valuation
