Excerpts from recent analysts' reports...
Standard & Poor's says 4Q likely to be more profitable for XinRen Aluminium
Analysts: Lorraine Tan, CFA / Su Peng Ng
Earnings Outlook / Estimates Revision
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• Industry still facing challenges. Xinren believes that the aluminium industry will continue to face challenges of low selling prices and high costs.
Based on industry leader Rusal’s recent guidance, the near term outlook is uncertain given the oversupply situation in the industry.
• 4Q12 likely to see increased profit. We think 4Q12 profit is likely to improve on slightly higher global aluminum prices (+2% QoQ) while demand has shown some uptick from end-3Q12 driven, we suspect, by increased stockpiling ahead of a pick-up in infrastructure building.
• Lowering estimates. With 9M12 profit falling short, we lower our 2012 net profit estimate to CNY17.2 mln (from CNY75.6 mln) after lowering ASP and increasing costs. We look for a better 2013 with full year contribution from CLI and the new carbon anodes plant to help to reduce costs.
Nevertheless, we also cut our 2013 net estimates by 27% to CNY155.8 mln as we reduce our ASP assumption given low prices currently.
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JP Morgan says buy Singapore Offshore stocks
Analyst: Ajay Mirchandani
“Buy in January, sell in April” – we believe we will see this trend again in 2013, 4th year in a row.
Over the last three years, we have seen Singapore Offshore stocks consistently outperforming the STI in first 3-4 months of each calendar year before seeing a consolidation of the stocks post the 1st quarter as the market awaits potential catalysts in the form of orders, earnings and Petrobras success.
With the recent 12-18% stock correction, we believe we are likely to see offshore outperform into early 2013 given (i) continued strong macro outlook for 'offshore orders' and (ii) likely receding concerns on margins as we see strong 4Q12 margin & a steady 2013 performance.
Overweight Keppel Corp (Price: S$10.17) with Price Target: S$13.30.
Overweight SembMarine (Price: S$4.19) with Price Target: S$5.40.
