By Carmen Lee
Fri, 27 Feb 2009, 11:05:17 SGT

Market Pulse: Midas, Noble, Parkway & Tsit Wing (27 Feb 2009)

FOCUS

Midas Holdings Ltd: Associate will drive 2009

Summary: Midas Holdings (Midas) posted revenue of S$144.5m (+2.9% YoY) and net profit of S$32.7m (+2.4% YoY). The results are almost exactly in line with our FY08 expectations. Utilisation remains high at >80% and Midas will be phasing in its third line at a slower pace than initially expected (1Q10 instead of 3Q09). The latter half of 2009 will be focused on ramping up its downstream processing capabilities that can fetch better margins. China continues to invest heavily in infrastructure, with half of the RMB4t plan slated to invest in railways. For FY09F, Midas’ core earnings will be stable and we expect its bottomline boost to come from its 32.5% owned train manufacturing associate, Nanjing SR Puzhen Transport. Our earnings have been mitigated as we move the third line’s operation till 2010. We maintain our BUY call with fair value of S$0.63 (prev: S$0.65) based on 14x (prev: 12x) FY09F PER. Our peg is raised in view of the stronger valuations that its peers are enjoying due to flow down benefits of the stimulus plans. (Kelly Chia)

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Noble Group Ltd: Resilient performance

Summary: Noble Group Ltd (Noble) delivered a resilient set of FY08 results with revenue growing 54% to US$36.1b and net profit soaring 124% to US$577.3m. Excluding one-off items, we estimate that net profit would have grown 83.4% to US$473.4m. 4Q08 net profit was 41.8% higher while revenue was 13.0% lower. With the exception of Metals, Minerals & Ores, all segments booked higher gross profits in FY08. Agriculture outperformed the rest with a 117.5% growth. Noble’s financial standing remains strong. It is in an enviable net cash position and the bulk of its debt matures in more than 18 months. As such, the group is in good shape to ride out the economic downturn. We expect volumes to weaken in 2009 and have trimmed our earnings estimate by 18%. Nevertheless, we maintain our BUY rating on the stock. Our fair value estimate has been eased to S$1.33 (from S$1.58) on lower earnings forecast. Do note that Noble has just announced an offer to acquire Australia listed Gloucester Coal. (Lee Wen Ching)

For more information on the above, visit www.ocbcresearch.com for detailed report.

Parkway Holdings Limited: Tough 2009

Summary: Parkway Holdings’ (Parkway) FY08 topline inched ahead 9% YoY to S$945.3m while bottomline crumbled 88% YoY to S$34.8m. The bottomline was wrecked as Parkway booked impairments amounting to S$52.4m in 4Q08 alone. Parkway did not pay any final dividends in a bid to preserve cash. Operationally, Parkway will face challenges with lower patient admissions and shorter stays but will try to buffer its earnings with more day surgery cases. Capex plans will also be watched closely with equipment upgrades vs. outright new purchases. On the Novena Hospital front, Management is actively trying to sell its first phase of 80 medical suites. We have tweaked our estimates in view of the slightly better than expected sales, impairment charges and refined our minority interest numbers. Our fair value remains at S$1.15 despite a lower valuation peg of 15x (prev. 16x) FY09F EPS as our core earnings have been bumped up. Maintain HOLD. We will become buyers as it approaches S$1.00 (trough valuation). (Kelly Chia)

For more information on the above, visit www.ocbcresearch.com for detailed report.

Tsit Wing Int’l Holdings Ltd: FY08 earnings marred by hedging losses

Summary: Tsit Wing International Holdings Ltd’s (TWI) FY08 earnings fell short of estimates, mainly due to hedging losses. Revenue grew 10.9% to HK$402.4m while net profit slid 43.5% to HK$20.0m. Net profit for the year would have fallen by a smaller 16.0% to HK$29.7m if not for hedging losses which arose from the group’s attempt to smoothen out volatile coffee prices; but wild swings in commodity prices resulted in losses instead. A final dividend of 2.5 HK cents has been declared, bringing total dividends for the year to 6.0 HK cents. Dividends fell short of our expectations, possibly due to cash conservation priorities in light of the global credit crunch. We rollover our valuation to FY09F NTA, and keeping our 0.9x parameter intact, derive a fair value estimate of S$0.22 (previously S$0.21). Maintain HOLD. (Lee Wen Ching)

For more information on the above, visit www.ocbcresearch.com for detailed report.

NEWS HEADLINES

- Wilmar posted a 10.4% YoY drop in revenue to US$5.8b but net profit rose 29.7% to US$372.3m for 4Q08, partly due to a positive number for income tax expense.

- Sembcorp Industries reported a 33.6% YoY fall in net profit to S$100.85m for 4Q08 despite a 6.6% rise in turnover to S$2.69b.

- Allgreen Properties reported a 86.3% fall in net profit to S$67.4m for FY08 as fair value gain on investment properties dived to S$8.4m from FY07’s S$367.4m.

- Yanlord posted a 2% rise in net profit to S$225.8m for FY08 despite a 18% fall in revenue to S$1.01b. Higher fair value gains on investment properties and higher selling prices for its residential projects boosted net profit.

- Communications design group Kingsmen Creative boosted its FY08 earnings by 51% to S$14.2m and declared that FY09 will be another record year.

- HTL International Holdings reported a S$15.8m net loss for 4Q08 against a S$1.39m net profit in 4Q07, partly due to losses from forex hedging.

- Straco Corporation reported a 25% rise in earnings to S$7.7m on the back of a 34% increase in revenue to S$32.3m for FY08.

- BreadTalk posted a 6.2% rise in net profit to S$7.8m for FY08 as revenue grew 35.5% to S$212m.