Lee Wen Ching
OCBC Investment Research (analyst – Lee Wen Ching): EYS has emerged from the recession in good shape. Efficient inventory management boosted the group's operating cash flow to S$30.8m from S$7.3m a year ago. Cash conversion cycle shortened to 103 days from 109 days, and net gearing posted a marked improvement to just 2.5% as compared to 21.9% a year ago.
While we do not foresee major price drivers for the stock, we are keeping our HOLD rating intact in view of its consistent dividends. Our fair value estimate has been raised to S$0.40 (previously S$0.37) as we rollover our valuations to FY10.
CIMB raises Allgreen target price to $1.50
CIMB (analyst – Donald Chua): We raise our ASP (average selling price) assumptions for Allgreen’s Singapore and China projects, based on the latest guidance. In particular, our China ASPs have been raised from Rmb10,000 psm to Rmb12,000-14,000psm, to reflect optimism on China properties. Our estimates are still 10-15% below guidance.
Our FY09-11 core EPS estimates have been raised by 8-30% as a result. We raise our end-CY10 RNAV estimate and target price (parity to RNAV) from S$1.38 to S$1.50 to factor in the above, offset by lower capital values for Allgreen’s investment properties.
While the stock is up 134% YTD, we believe positive take-up of planned launches in 2H09 could lift its valuations further. Allgreen is best positioned to capitalise on rising sentiment for mass-mid-tier properties, in our view, given its large inventory in this segment. Maintain Outperform.
Forecast of Raffles Medical's performance by UOB KH.
UOB KH raises Raffles Medical’s target price to $1.76
Given the better-than-expected patient volume in the April-June period and improving operating environment, we have revised net profit estimates for 2009 and 2010 to S$36.6m (+44%) and S$44.1m (+67%) respectively, up from previous estimates.
This is primarily due to more optimistic yoy revenue growth assumptions of 9.9% and 11.2% for 2009 and 2010, compared with previous assumptions of 0.2% and -6.6% respectively.
Valuation/Recommendation: Upgrade to BUY. The stock is currently trading at a 2009 PE of 17.3x, above its long-term average PE of 14.0x but below peer Parkway Holdings’ 2009 PE of 23.0x.
The target price has been upgraded from S$0.59 to S$1.76 based on DCF valuation (WACC: 8.5%; terminal growth: +1%), equivalent to a 24.7x 2009 PE. At this level, RMG offers a potential upside of 43%. Upgrade RMG from SELL to BUY.
