Excerpts from latest analyst reports….CIMB says value has emerged in Berlian Laju stock after 51% slump in mere 3 months
Analyst: Raymond Yap, CFA
Source: CIMB, July 15
Maintain OUTPERFORM but reduce SOP target price to Rp680. Our conclusion after last week’s investor roadshow to market BLTA’s rights issue is that the worst is probably over. Value has emerged as a 51% slump in its share price over the past three months has taken the stock to almost 60% discount to our sum of parts.
We continue to rate the stock an OUTPERFORM but reduce our target price from Rp1,000 to Rp680. Potential re-rating catalysts include the bottoming of chemical rates in 2010 and a gradual recovery from 2011, and cabotage opportunities that will provide an additional source of growth.
Also, dilutive and risky transactions like the Camillo Eitzen acquisition are no longer on the table and future equity raising is unlikely. Our core EPS forecasts have been reduced 46-60% mainly due to thehigher post-rights share base, but also due to higher-than-expected depreciation.
• Our target price is reduced to Rp680 (S$0.11) because we previously overestimated the value of BLTA’s vessels and we now impute in the potential dilution from the possible conversion of CBs due 2015. Despite this downgrade, there is still considerable upside from the current share price. With the shares already lingering at multi-year lows, we believe that investors will not get BLTA much cheaper and should position for an eventual share price recovery.
DBS Vickers says S’pore tech’s growth moderated, not dented
Analyst: Tan Ai Teng
Source: DBS Vickers, July 15
Optimistic update balanced with caution. Venture Corp, Longcheer and Broadway participated in our Pulse Of Asia conference last week and had a strong investor turnout. Management presented robust growth outlook for most business segments, but also cautioned investors on prevailing challenges such as component tightness,uncertain end demand and impact from higher cost in China. We sense that the overall view on outlook has moderated but it was clear that there would still be growth supported by improved economic conditions over last year.
Component tightness vs inventory buildup. 2H forecasts could have been even stronger for some companies if not for component tightness. However, we feel that the tightness has helped rein in excessive building up of inventories downstream, which some are starting to worry about amid softening end demand. In our view, inventory buildup may not get too serious given 1) tightness in basic components supply till yearend, and 2) very limited supply from foundries and recent upward revisions in ASP to the fabless houses.
Expect flat to small sequential growth in 2Q10.Overall, we expect most of the tech companies under our coverage, except Meiban and Creative, to report improvements or at least maintain flat earnings q-o-q, reflecting the still robust tech demand before the onset of the European debt crisis as well as unfulfilled sales orders due to component shortages early this year.
Specifically, we expect Broadway, Hi-P and Venture to record sequential growth, Meiban to be flat, Creative to remain in the red and Longcheer would be slightly down q-o-q. YoY comparisons are expected to be positive.
Our stock picks are based on products in demand (Hi-P: Apple products, Venture:corporate/capital equipment, Broadway: recovery in demand for semicon equipment), Asian consumption (Longcheer: 3G in China, handsets in India).