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OCBC: SG: MARKET PULSE: United Envirotech, Valuetronics, CityDev (6 Aug 2013) |
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MARKET PULSE: United Envirotech, Valuetronics, CityDev
6 Aug 2013
KEY IDEA
United Envirotech: Decent 1QFY14 start
Summary: United Envirotech Ltd (UEL) reported 1QFY14 revenue of S$44.1m, +37.5% YoY (but -5.9% QoQ), meeting 14.2% of our FY14 forecast, while net
profit slipped 2.6% YoY and 18.9% QoQ to S$5.7m, or about 12.5% of our full-year forecast. We deemed it to be a decent start as its fiscal first
quarter tends to be seasonally softer. Going forward, management remains upbeat about its prospects in China, where the Chinese government has a
planned investment on CNY4t in water resources by 2020; it adds that China is consistently tightening the effluent discharge standards. But we are
tweaking our FY14 estimates slightly lower (revenue by 7.4%, earnings by 5.1%) to account for a likely smaller EPC pipeline. Our fair value also
eases slightly from S$1.03 to S$0.975, still based on 13x FY14F EPS. Given the limited upside after the recent outperformance, we downgrade it to
HOLD. (Carey Wong)
MORE REPORTS
Valuetronics Holdings: Discontinuing coverage
Summary: Valuetronics Holdings Limited (VHL) will begin FY14 on a fresh page, as it will no longer incur losses on its Licensing business following
its decision to terminate operations in 2QFY13. Any recovery in VHL’s earnings will likely translate into higher dividends for its shareholders, in
our view, as VHL had a relatively stable dividend payout ratio of 37-42% from FY10-13. This is also supported by VHL’s strong net cash position.
Looking ahead, we believe that VHL will focus its attention largely on its LED lighting OEM business, given the robust industry growth prospects and
its largest customer’s market leadership position in this field. However, given the continued lack of trading liquidity in VHL’s stock and a
reallocation of resources, we are CEASING COVERAGEon the stock. Our last rating was a ‘Hold’ with a fair value estimate of S$0.195. (Wong Teck Ching
Andy)
City Developments Limited: 2Q13 PATMI up 48% YoY
Summary: CDL’s 2Q13 PATMI increased 48% YoY to S$203.8m, mostly due to disposal gains from several industrial property assets. 1H13 PATMI now
cumulates to S$341.5m which makes up 49% of our full year forecast. We judge this to be mostly in line with our expectations. Residential sales
performances remain firm, with 2013 launches D’Nest, Bartley Ridge and Jewel@Buangkok showing healthy sell-through rates to date. In 2H13, the group
expects to launch a mixed use JV project at the junction of Upper Serangoon Rd and MacPherson Rd near Potong Pasir MRT. Hotel subsidiary Millennium
and Copthorne Hotels’ (M&C) 2Q13 PATMI decreased 17.7% YoY as 181k net rooms were taken out of the supply due to enhancement works. 1H13 global
REVPAR, however, was up 4.1% to GBP71.27; AOR and ARR increased by 0.7 ppt and 3.1%, respectively. The group also announced a special interim
dividend of 8 S-cents per share. Maintain HOLDon CDL with our fair value estimate of S$12.04 (15% RNAV disc.) under review. (Eli Lee)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
- US stocks mostly fell on Mon because of a report indicating above-expectations growth in the service sector and a Fed official’s remarks that the
Fed is closer to curbing its asset purchases.
- Singapore Exchange Ltd is relying on derivatives for growth amid a dearth of merger and acquisition candidates in Asia.
- The Singapore Mercantile Exchange (SMX) has come out to say that it is not impacted by the troubles of its sibling, the National Spot Exchange
Ltd.
- A disposal gain of S$18m from the sale of Central Plaza in May 2013 gave Forterra Trust a liquidity boost and helped lift its 2Q13 net profit to a
41.7% YoY rise to S$24.2m.
- Hiap Hoe has recommended a record high interim dividend of 1.2 S-cents per share, after seeing its 2Q13 earnings surge 75.9% YoY.
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