|DBS VICKERS||UOB KAYHIAN|
Glimmer of hope for rig market
Petrobras and Sete Brasil close to settlement
Keppel-Awilco could potentially ink first newbuild rig contract in 2.5 years, worth up to S$2.3bn
Borr consolidating the fragmented jackup market
Reiterate BUY on Sembcorp Marine, Keppel
Plantation – Singapore
Expect Higher FFB Production In 2018
All companies under our coverage performed within expectations in 4Q17, except GGR. FFB production was weaker qoq in 4Q17 due to a lagged impact from the drought. The weak production is expected to continue in 1Q18 as the quarter is a low production period. For 2018, we forecast FFB production for our coverage companies to grow 8-20% yoy. We expect CPO prices to show weakness, especially in 2H18, as palm oil is likely to be in oversupply. Maintain MARKET WEIGHT.
|OCBC SECURITIES||CIMB SECURITIES|
Yoma Strategic Holdings: Introducing a fourth business pillar
Yoma announced yesterday that it plans to acquire a 34% stake in Wave Money from FMI for US$19.4m. Wave Money is the first licensed provider under the Central Bank of Myanmar’s Mobile Financial Services Regulation to offer mobile financial services to consumers in Myanmar. In our opinion, Yoma’s investment in Wave Money should be beneficial in the mid to long term. Firstly, over 80% of Myanmar’s population remains unbanked, according to Channel NewsAsia, while physical bank branches and ATMs are limited. Secondly, Wave Money should prove to be complementary to Yoma’s existing businesses. Notwithstanding the positives as outlined above, we have not incorporated the new business into our assumptions at this juncture, given the relatively early stage of Wave Money’s growth. In light of recent market volatility, as well as the continued oversupply of condominiums in Yangon, we prefer to adopt a conservative stance and employ a higher discount to our SOTP valuation, thereby adjusting our fair value estimate from S$0.55 to S$0.51. Maintain BUY.
Key takeaways from Kuala Lumpur NDR
■ We took MTEC’s management on a non-deal roadshow (NDR) to KL where investors were keen to learn about its competitive edge, customer mix and project pipeline.
■ We forecast 12-15% core EPS growth p.a. in FY18-20F for MTEC, driven by both new and existing projects under the auto and consumer electronics segments.
■ MTEC’s ongoing new customer wins (Tesla, Beats, Nio, Wey, Bose) is a testament to its tooling capabilities and track record, in our view.
■ Net cash makes up c.20% of its current market cap.
■ We raise FY18-19F EPS by 8.1-10.3% (better gross margins, cost control), resulting in higher TP of S$1.76, based on 12x FY19F P/E (above regional peers’ 11.4x).
Jadason Enterprises Limited
Workers hold the key to better profitability
■ 4Q17/FY17 net profit was below expectations at 23%/82% of our FY17F estimate.
■ Balance sheet remained net cash and borrowings were reduced to S$3.2m as at endDec 17 from S$9.4m at end-Dec 16.
■ Demand and forecasts from its major customer remained strong in 4Q17 but Jadason still experienced difficulty hiring production workers.
■ We cut net profit for FY18-19F by 36-47% as we reduced gross margin assumptions given a higher wage bill due to overtime costs until its labour woes are resolved.
■ Our TP falls to S$0.08 due to our lower forecasts, still based on 12.34x CY19F P/E (2 s.d. above its average forward P/E during the FY04-07 earnings recovery cycle).
Check out our compilation of Target Prices