Excerpts from analysts' reports
CIMB maintains 'outperform' rating on Yangzijiang Shipbuilding
Analyst: Lim Siew Khee
YZJ's strong order momentum is a new record since FY08 (US$1.38bn), marking the end of a 5-year drought in shipbuilding for YZJ. Photo: Company
YZJ is competing head-to-head with the Korean shipyards with its maiden capesize bulk carriers (208,000DWT) and large-sized containerships (10,000TEU) in the latest slew of orders worth US$871m.
The 10,000TEU containerships are likely to be options exercised by Seaspan (estimated at US$85m-90m/vessel), while the customer for the four capesize bulk carriers has not been disclosed.
YTD order wins reached US$2.1bn, which is in line with our US$2.5bn target.
Maintain Outperform with a target price (S$1.25) still based on 1.4x CY13 P/BV, 1 s.d. below its 5-year mean. More shipbuilding orders are catalysts.
Recent story: YANGZIJIANG: 'Outperform' & 'Buy' calls from CIMB, Deutsche Bank, UOBKH
DBS Vickers initiates coverage of Dairy Farm with 'buy' call
Analysts: Alfie Yeo & Andy Sim, CFA
Direct proxy to consumption growth in Asia. Dairy Farm (DFI) is a leading pan Asian retailer, operating over 5,600 supermarkets, hypermarkets, health and beauty stores, convenience stores, home furnishing stores. DFI offers exposure to rising Asian consumption as its retail operations are diversified across Asian markets, with different store formats targeting various consumer segments.
Defensive earnings, sound financials. We like DFI for its defensive earnings, strong net cash generation. DFI has paid out >50% of its earnings over the last 5 years at least. Net cash of US$420m as of 1H13 also provides warchest to pursue inorganic growth opportunities.
Recent share price weakness provides an entry opportunity. We see a window of opportunity to accumulate on this counter. DFI has corrected by c.23% from May’13, more than STI Index. Valuation is attractive at 25.5x FY14F PE, below its last three years’ average valuations.
Chart: Bloomberg
Initiate with Buy, TP US$11.60. We forecast DFI’s revenue and earnings CAGR to be 7% and 8%, respectively for the next 3 years, driven by new store openings and 3% SSSG. Our DCF based TP of US$11.60 TP implies a reasonable 29x FY14F PE, below DFI’s recent valuations of +1 SD and 31x forward PE since January 2012. We initiate coverage of DFI with a Buy recommendation.
