Forecast of Epure's performance by DMG
DMG raises target price of Epure to 71 cents
Analysts - Selena Leong & Terence Wong: Epure’s 2Q09 results were in-line with our estimates, with earnings rising by 28%. With RMB900m worth of contracts currently under negotiation, our confidence in its ability to secure more future projects and grow its order books is reaffirmed. Maintain BUY, with revised fair value of S$0.75 (S$0.51 previously).
With the positive industry outlook, we are expecting continued growth in revenue from Epure’s project wins. Applying a P/E of 14x (in line with its peers) to Epure’s FY10 earnings, we derive a new target price of S$0.75 (S$0.51 previously).
Equipment for wireless infrastructure by Sinotel.
AMFRASER reduces target price of Sinotel to 93 cents (from $1.04)
Analyst – Winston Peak: Sinotel announced on 4 Sept that they will place up to 28m new shares at S$0.5052 per share to institutional investors. Management has expressed optimism that the new funds can be swiftly employed to secure more projects.
As we have mentioned in our initiation report dated 31 Aug 09, demand in PRC for wireless infrastructure installation in buildings andother establishments is building up exponentially due to the 3G licenses issued to the 3 telcos early this year.
We continue to be bullish about Sinotel’s prospects amid the booming industry that they are in. However, we are mindful that any new contracts secured as a result of the new funds would mostly start to contribute in FY10 as well as the risk of further dilution. In view of the above, we have adjusted our revenue projection and risk premium accordingly.
Our earnings model gives us a Fair Value of 93 SG cents which is 50% higher than the last traded price of 62 SG cents. Overall, we still believe the shares merit a BUY recommendation.
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Forecast of Longcheer's performance by DMG
DMG maintains ‘buy’ rating on Longcheer
Analyst – James Lim: 4QFY09 revenue of RMB634.6m and net earnings of RMB38.3m in line with expectations of RMB534.6m and RMB38.0m, respectively.
Key positives going forward include:-
(i) Strong net cash position of 28 S¢ per share;
(ii) The growing 3G market in China;
(iii) Strong cash flow generating attributes;
(iv) 1QFY10F top and bottomline to see at least sequential growth of 42% and 27% respectively.
Valuation/Recommendation: Maintain BUY with target price of S$0.865 (from S$0.57 previously) based on 7.6x FY10 P/E.
