Source: KELive analyst Goh Han Peng (above)
Kim Eng analyst sets 51-cent target for Sinotel Technologies
KELive Research (analyst – Goh Han Peng): Sinotel’s last updated orderbook of Rmb 350m should provide sales visibility till 2010. Notably, Rmb 100m of the orderbook was secured in 2Q09 with 3G comprising 60%. On our forecasts, we see earnings growth of 22% and 7% in FY09/10, translating to 4.3x FY09 P/E and 4.1x FY10 P/E, respectively.
Valuations also imply a 60% valuation gap compared with HK peers despite operating under similar industry dynamics. We have a target price of $0.51, based on P/E of 5x FY10. Short-term catalysts include a confirmation of its plans to list ADRs on Nasdaq to facilitate the price discovery process further. Buy.
The stock was listed 20 Nov 2007 and traded as high as 75 cents, before de-rating substantially along with its S-chip peers.
Quarterly losses are seen to improve sequentially and then reverse from Q4.
Nomura Singapore has a ‘buy’ on STX Pan Ocean but a ‘reduce’ on NOL
Nomura Singapore (analysts – Cecilia Chan and Andrew Lee): Among our Singapore shipping coverage, we have a BUY on STX Pan Ocean (STX.SP, S$18.70 price target) and REDUCE on container line Neptune Orient Lines (NOL.SP, S$1.20 price target).
We have a BUY on STX Pan Ocean in line with our positive view of the bulk shipping sector, with 2Q09 likely to mark the largest quarterly loss. We see quarterly losses sequentially improving and the company being profitable from 4Q09 onward. We believe management may see a full-year profit as a possibility, depending on how strongly freight rates rebound, though we would view a profit as unlikely. Still, with STX Pan Ocean apparently on the road to profitability, we see its fair value at 1.2x P/BV, its mid-cycle P/BV multiple.
We have a REDUCE on NOL, since:
1) we estimate it will continue to report quarterly losses for the next 12 months; and
2) though the 3Q09F loss is likely to be smaller than in 2Q09, we estimate quarterly losses will expand in 4Q09F and 1Q10F.
At its 2Q09 analyst briefing, NOL reiterated that a significant loss is expected this year as volume remains low, even with demand increasing. Further, in line with our view, management is concerned about the sustainability of higher container freight rates. On our estimates, NOL will report full-year net losses for FY09F and FY10F, which we think argues for a below-mid-cycle valuation.
Our S$1.20 price target is based on the mid-point of trough and mid-cycle P/BVs. A more positive view of NOL would require visibility on a return to profitability, we think. With the stock trading at 1.2x FY10F P/BV, a mid-cycle valuation, valuations appear rich.
Kim Eng analyst's forecast for ASL Marine's financials
Kim Eng maintains ‘buy’ on ASL Marine with target price of $1.62
Kim Eng Securities (analyst – Rohan Suppiah): ASL has also not secured any new shipbuilding orders since October 2008, but is currently working on its existing orderbook of S$523m.
Management’s reading of the market is that it does not expect to receive new orders until the credit situation improves. Under these conditions, we are conservatively not expecting any new shipbuilding orders and therefore factoring in a 60% decline in the segment’s revenue from FY12.
Ship chartering revenues will be propped up by the addition of 12 vessels, and better rates on timecharters, but these can be volatile. We are leaving our FY10 core net profit forecast unchanged at S$45m, for a YoY pick-up of 10%. ASL is still trading at compelling valuations of 6.8x FY10 earnings.
We maintain our BUY recommendation, to our target price of $1.62, in line with peer average of 10x PER.
Recent story: ASL MARINE: $523-m shipbuilding orderbook until end-FY11
