Earnings downgrades continued for all the countries in our coverage.
Thailand proved to be more resilient and was least affected. In
Singapore, downgrades outnumbered upgrades by almost two to one
as there were 16 earnings cuts and just nine upgrades.
Note that the big-small P/E gap has
closed in Singapore. Based on our
coverage, small caps are now trading
at a 14.1% premium over big caps on
CY12 earnings and a small discount of
7.1% to big caps on CY13 earnings. We
advocate stock-picking here.
Armstrong was raised from
Underperform to Neutral as we upped
our target price to S$0.29
. Core net
profit improved 55% qoq in 3Q12 but
was still 13% below consensus. Its
share price will be supported by its
solid dividend yield of 6% and
STX OSV was downgraded to Neutral
due to risk of a stake sale by its major
We also lowered our
target price to S$1.47.
’s 3Q results undershot
our expectations by a wide margin
because of weaker-than-expected
base fares and ancillary revenue. We
cut it from Outperform to
Underperform as the share price has
done well since its IPO at THB3.70.
Derating is expected from lower fare
yields and high fuel costs.
We also initiate coverage on
Silverlake with an Outperform. A
leader in core banking software in
ASEAN, high switching costs makes
for resilient earnings.
The offer to take Harry’s Holdings
private provides a benchmark
valuation for SGX-listed small-cap
F&B stocks (details inside).
Say “I do”to our
This week, we highlight stocks that
get the “high conviction” stamp of
approval from our analysts across the
region. These can be found in Figure
16. Details are available in their
December – holiday time
Going for a holiday soon?
like to have it under the banyan tree?
More are doing so, leading to
earnings resurgence at The BanyanTree
. The group is on track to stage a
full-year earnings recovery (9M12:
S$9.9m) after racking up S$1.6m
profit in FY11. Based on forward
bookings, 4Q12 is ahead by 20% yoy.
Coal sector may have
After touching a low of US$78/t in
mid-Oct, the Newcastle spot coal
price index continued to tick up to
close at US$80.3/t. While excess
supply, particularly from Indonesian
producers, remains the key overhang
for coal price, the recent price uptick
suggests stability in the market in the
Signs of a bottoming coal
price, combined with the investor
interest that we noted during our
UK/US marketing trip, suggest that it
may be worth investors’ while to have
a Neutral weighting on the sector. We
could see interest in newly listed Geo
Energy, the only coal play listed on
the SGX once the Indonesian coal
plays are rerated.
Yoma Strategic and Interra Resources
could draw investor interest ahead of
President Obama’s visit to Myanmar
on 19 November
. Myanmar has just
passed its foreign investment law that
allows full foreign ownership and
offers tax breaks and long land leases. (Read Report
You may be interested to read...
Source : CIMB Research
Labels: Armstrong, Interra Resources, Silverlake, STX OSV, The Banyan Tree, YOMA Strategic Holdings