Bro­kers’ take

The New Paper - - BUSINESS -

Com­piled by Anita Gabriel

PACC OFF­SHORE SER­VICES HOLD­INGS | BUY TAR­GET PRICE: $0.41 NOV 14 CLOSE: $0.325

DBS Group Re­search, Nov 14

Q3 earn­ings came in be­low ex­pec­ta­tions given the com­bi­na­tion of start-up costs for the POSH Ar­ca­dia, higher-than an­tic­i­pated op­er­at­ing ex­pen­di­ture for other idle ac­com­mo­da­tion ves­sels, and late com­mence­ment of con­tracts of some of the off­shore sup­port ves­sels (OSV) on long-term con­tracts in the Mid­dle East.

OSV day rates de­clined slightly dur­ing the quar­ter, though go­ing for­ward, we see lim­ited down­side to rates as the off­shore in­dus­try re­cov­ers.

In the near term, we see a stronger Q4 as the POSH Ar­ca­dia gets a full quar­ter of util­i­sa­tion and more of the Mid­dle East OSVs are de­ployed.

We con­tinue to see POSH as a name to ride the grad­ual off­shore ser­vice sec­tor up­turn; its share price has his­tor­i­cally been strongly cor­re­lated with oil prices, which are ris­ing again.

Fur­ther, POSH has no bonds out­stand­ing and re­mains a pri­vati­sa­tion can­di­date with Kuok (Sin­ga­pore) Ltd as the ma­jor­ity share­holder (81.89 per cent own­er­ship).

FIRST RE­SOURCES | NEU­TRAL TAR­GET PRICE: $2.13 NOV 14 CLOSE: $1.93

RHB Re­search, Nov 14

As ex­pected, First Re­sources’ Q3 2017 earn­ings shrank quar­teron-quar­ter, fall­ing 57 per cent mainly due to lower prod­uct prices.

Nev­er­the­less, lower unit costs helped to buf­fer earn­ings, on the back of a still strong fresh fruit bunches (FFB) out­put growth of 19 per cent (ver­sus our fore­cast of 17.4 per cent and man­age­ment’s guid­ance of 15 per cent) in the nine-month pe­riod.

De­spite the strong year-to­date out­put, we main­tain our FFB growth fore­cast as we ex­pect growth to con­tinue mod­er­at­ing in Q4. We raise our earn­ings fore­cast for FY17-FY19 by 7-9 per cent to im­pute lower unit costs.

Our fore­casts are now 6-19 per cent above con­sen­sus. Our tar­get price is lifted to $2.13 from $2.00 based on an un­changed 2018 fore­cast tar­get of 13 times price earn­ings in line with historical av­er­ages.

WIL­MAR IN­TER­NA­TIONAL | HOLD FAIR VALUE: $3.51 (EASED FROM $3.66) NOV 14 CLOSE: $3.19

OCBC Re­search, Nov 14

Re­sults were within ex­pec­ta­tions.

Wil­mar re­ported a 0.4 per cent year-on-year (YoY) rise in rev­enue to US$11.1 bil­lion in the third quar­ter 2017, sup­ported by in­creased sales from Oilseeds & Grains. Net profit fell 5.7 per cent YoY to US$370 mil­lion while core net profit de­creased 15.9 per cent to US$323.7m in third quar­ter.

Nine-month rev­enue and net profit ac­counted for 74 per cent and 70 per cent of our full year es­ti­mates, re­spec­tively.

The good per­for­mance in oilseeds & grains and strong con­tri­bu­tions from as­so­ciates were off­set by weaker re­sults in the trop­i­cal oils and sugar busi­nesses. Per­for­mance of the other ma­jor busi­ness seg­ments is ex­pected to be “sat­is­fac­tory”.

We tweak our es­ti­mates and roll over our val­u­a­tions to FY18 earn­ings and our fair value eases from $3.66 to $3.51.

Dis­claimer: All analy­ses, rec­om­men­da­tions and other in­for­ma­tion herein are pub­lished for gen­eral in­for­ma­tion. Read­ers should not rely solely on the in­for­ma­tion pub­lished and should seek in­de­pen­dent fi­nan­cial ad­vice prior to mak­ing any in­vest­ment de­ci­sion. The pub­lisher ac­cepts no li­a­bil­ity for any loss what­so­ever aris­ing from any use of the in­for­ma­tion pub­lished herein.

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