Forecast of Sinotel's performance. Source: AmFraser report Aug 31.
Sinotel's outdoor system for enabling wireless communication. Photo: AmFraser report
AmFraser initiates coverage of Sinotel with $1.04 target price
AmFraser Securities (analyst – Winston Peak): We arrived at a fair value of SGD1.04 using our discounted-cashflow model, representing 8.8 times FY09 forecasted earnings. Despite all the growth impetus, we prefer to be prudent in our growth assumptions especially in the face of liquidity constraints.
We assume revenue growth of 25.7%, 18.2% and 14.8% for FY09 to FY11. Also, net profit will be hit by higher tax rate from the current 0% to 7.5% for FY10 to FY12 before normalizing to 15% onwards.
At the closing price of 44 cents, the shares are trading at a steep discount, which we feel merits an outright BUY recommendation.
Terence Wong
DMG pegs ASL Marine’s target price at $1.41
DMG & Partners (analysts – Terence Wong & Serene Lim): We recently hosted a post-results briefing for ASL. Investors’ concerns centred on declining shipbuilding orderbook, competition arising from other repair yards and whether shipchartering activities could be sustainable.
Management reassured that it is receiving a healthy level of newbuild and repair enquiries, driven by increased offshore activities.
While we do not anticipate sudden pick-up in newbuild orders for this year, we believe this has been priced in. With the expansion of Batam yard to be fully completed by Mar 10, we believe ASL will be one of the key beneficiaries for repair work of an enlarged fleet globally. Ascribing P/E of 6x to FY11 EPS, we derive our target price of S$1.41. Maintain BUY.
JP Morgan expects S-REITS to outperform property shares
JP Morgan (analysts – Christopher Gee & Joy Wang): We expect the Singapore REITs to generate a 20% total return in a low-risk context in the next 12 months. The S-REITs should benefit from a steadily declining cost of debt financing and a reduction in the still-large equity risk premium that is still being applied, which should lead to an upward trend in S-REIT fair valuations.
Our top picks are the small or mid-cap S-REITs such as Frasers Centrepoint Trust, CDL Hospitality Trusts, Ascendas India Trust and CapitaRetail China Trust. Amongst the larger S-REITs we favor A-REIT and CapitaMall Trust.
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