By Carey Wong
Tue, 18 May 2010, 08:49:36 SGT

Market Pulse: Singapore Properties, Goodpack and Valuetronics (18 May 2010)

FOCUS

Singapore Property: Sales figures continue to impress

Summary: For the month of Apr, property developers launched more non-landed property units than in Mar, with the number of new launches increasing 11.7% to reach 1,788 units. A total of 2,139 non-landed property units were sold by developers in Apr and this was 19.6% more than what they had launched in the month; this helping to reduce the developers’ inventory of launched but unsold property units. Developers that made the highest number of sales in Apr were UOL Group (BUY; Fair value S$5.33), City Developments (HOLD; Fair value S$11.11) and CapitaLand (BUY; Fair value S$4.97). For the coming month, pipeline of new launches remains strong. While the debt crisis in Europe may have some negative impact on the buying sentiment, we believe that demand for the upcoming launches should still remain healthy, underpinned by the low interest rate environment. We reiterate our NEUTRAL rating on the property sector. (Foo Sze Ming)


Goodpack Limited: Ample room for growth; maintain BUY

Summary: Goodpack Limited reported 3QFY10 revenue of US$30.6m (+26.9% YoY) and PATMI of US$9.0m (+39.6% YoY) last Friday. Both topline and bottomline were largely in line with the market’s expectations and ours. All product verticals posted robust double-digit growth YoY, with synthetic rubber registering the highest percentage increase, followed by juices and then natural rubber. Management also updated that it is making significant headways in its efforts to penetrate into new product verticals. Nevertheless, management prefers to keep a cautiously optimistic stance on the outlook, noting that the economic environment in which the group is operating in remains challenging. However, it adds that it is well-positioned to ride on the recovery. We are holding our FY10-11 forecasts intact as the results were in line with our expectations. However, as we roll our valuations into FY11, our DCF-based fair value is now raised to S$1.77 from S$1.51 previously. Maintain BUY. (Kevin Tan)


Valuetronics Holdings: Stellar 4QFY10 results

Summary: Valuetronics Holdings (VHL) reported its 4QFY10 results this morning. Both revenue and net profit came in stronger than expected at HK$307.0m (+92.7% YoY, +5.3% QoQ) and HK$22.0m (reversing loss of HK$2.7m in 4QFY09, +63.0% QoQ) respectively, as the group benefited from increased OEM sales and additional sales from new ODM projects for a Fortune 500 MNC customer. As such, FY10 revenue of HK$1,097.4m (+18.3%) was 3.5% ahead of our full-year sales forecast, while net profit of HK$58.8m (+10.8%) was 23.6% higher than our earnings projection. In view of customers’ improving sentiments in the past two quarters and encouraging change in their ordering trend, we note that VHL will be moving ahead with its plans for construction of a new warehouse and investment in production equipment at its Daya Bay factory that were previously halted due to uncertain market conditions. We will be participating in VHL’s analyst briefing tomorrow to get more updates on its business outlook. For now, we maintain our BUY rating but place our S$0.29 fair value under review. (Kevin Tan)


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


NEWS HEADLINES

- Singapore’s non-oil domestic exports rose 29.4% YoY in Apr – the largest monthly increase since 2005.

- Trade and Industry Minister Lim Hng Kiang said Singapore will be embarking on a “Jurong Island version 2.0” upgrade to maintain its lead in the energy and chemicals arena.

- SIA filled 77.6% of its seats in Apr, a 5.4 percentage point YoY improvement.

- A unit of ST Engineering has won a S$4.6m contract by Changchun Railway Vehicles Co.

- Tai Sin Electric has secured a S$28m contract to supply low voltage power cables for an infrastructure project.

- Olam has bought an additional 10m shares in New Zealand Farming Systems Uruguay.

- A unit of BBR Holdings has bought an additional 3.45% stake in FOSTA Pte Ltd.

- See Hup Seng has requested for a trading halt.