In time of bearish market, Resort stand up as gainer, perhaps due to its recession proof and captive business models and people rushing to path their money in safe stock with cash-rich and strong cash flow. It good to pick resort in weakness and sell strength
JP morgan expected rate cut, when Bank negara hold meeting on 24Nov to reflect a combination of slowing external and domestic demand, while inflation is easing. Crude oil dip to US55, our petrol likely to go down to RM1.92 by end of this month. I wonder what is the impact on CPO price? whether CPO could hold its floor price of RM 1400-1500 still in doubt
totally agreed with that. during recession, companys that having proven resilient is definitely on the chase. one should only picks this type of stock, if get stuck with them, you have sound sleep without worry, you know these company will never loss in longer term.
Make loss if coal exceeds US$120? - Chief executive officer Datuk Seri Che Khalib Mohamad Noh says Tenaga may continue to make losses if coal prices exceed US$120 a tonne. He was speaking at the International Energy Security Forum in Kuala Lumpur yesterday.
§ Average US$116 a tonne till December - He added that Tenaga has secured coal supply till next December but has not locked in coal prices because most suppliers are demanding for index-linked price (i.e. pricing at prevailing price at point of delivery). He said Tenaga has secured coal requirement for September to December this year at average price of US$116 per tonne.
§ We find the statements interesting - Contrary to management's guidance, according to our numbers, Tenaga would only make losses if average coal cost is over US$140 a tonne. On coal costs, compared to average price of US$114 a tonne for September-November provided last month, that means Tenaga may have secured another month of supplies since at above US$120 a tonne when spot coal prices was exchanging at US$100 average in the last four weeks.
§ Poor 1QFY08E earnings outlook? - In addition, Tenaga hinted that with coal prices still high, its 1QFY08E results may only break even or post marginal profit. The outlook appears to be below consensus.
§ Pressure mounts - Overall, we believe the seemingly negative statements were made in response to pressure from consumer and manufacturing groups to reduce electricity tariffs and as part of its effort to lobby for a tariff hike.
· CPO price recovery likely much further out. China's stimulus package, and Malaysia's replanting incentives and bio-diesel targets will help stem further steep drops in CPO prices. However, catalyst for a strong CPO price recovery in our view looks to be further out with the global economies falling into deeper recession and JPM's expectation of a mild overall 2009 recovery. A reversal in the rising inventory levels in Malaysia is required for us to start to turn bullish on the sector again. Nevertheless, the just released Oct-08 data continued to show a 7% M/M rise in inventory levels to 2.09MT, surpassing the previous peak of 2.03MT in Jun-08. We cut our 2009-10E CPO forecast from M$2,200/t to M$1,580/t (see separate Malaysian Plantations note for details).
· Forecast cut: The lowered CPO assumptions translate to a cut in Sime's earnings by 20% for FY09E and 29% for FY10E. The smaller cut in FY09E is because Sime had sold forward 25-30% of its palm oil volumes this financial year at a higher average price of M$2,900/t.
· Balance sheet strength: We estimate Sime Darby to remain in a net cash position with positive FCF even if CPO prices were to fall to M$1,000/t in FY09E. All of the group's debts are denominated in Ringgit. Of the group's long-term debts, 60% are due within the next 24 months, with the remaining due largely in 2011/2012.
· Downgrade from Neutral to UW: We cut our Jun-09 PT for Sime from M$7.30 to M$5.80 based on sum-of-parts and valuing the plantation business at 14x FY09E. Sime has out performed its peers and the market in the past 1 and 3 months by 4% and 9% respectively. Special dividends in FY08 we believe are unlikely to recur in FY09 in view of weaker earnings. Risk - sharper and faster than expected CPO price recovery.
If CPO fall to 1300-1400, what would be profit margin for planter even with reduce fertilizer cost? CPO and crude oil still have close correlation, if crude oil fall US50-60, CPO likely to trade below RM1500.
Compared with CPO, crude oil have ability to cut production without incur high stockpile problem. To cut CPO production, cooperation among planter like IOI corp, KLK and asiatic are needed to delay or abolished their plan to expand palmoil landbank in indonesia. To increase domestic consumption, more health awarness through education/advertisment to further introduce the benefit of refine palmoil as a better cooking oil, enrich with natural Vit E and improved R&D for better quality to narrow price gap with other soyaoil, corn oil, sunflower oil etc. Therefore, if palm oil is more widely used, the fall might not be that sharp as the stock level can be reduced to a much more comfortable level.
Part of the TM share rebounded this afternnon is because of management reaffirmed dividend policy, which was miss yesterday during teleconference with analyst.
Europe market show sign of relief, Asian market also off of their low. All eye focus on US market as 15 Nov is dealine for last date redemption of hedge fund.
§ We re-examine BST's prospects following a conversation with management.
Impact
§ Revenue growth trends remain strong, driven by jackpots. 1Q FY4/09 revenue growth of 9% YoY was even stronger on an underlying basis, as revenue per draw grew 15% YoY. We now expect a flat number of draws for FY4/09 as a whole, meaning that in 2H FY4/09, we could be looking at a 5% HoH growth from the number of draws alone. This in turn means that our full-year revenue growth forecast of 9% may still be conservative. Additionally, the jackpots have grown so quickly that non-4D revenue now accounts for 30% of revenue, up from 25% previously. This could boost EBIT margin by 20–30bp.
§ Defensive revenue stream going into GDP slowdown. Historically, even in severe recessions, lottery revenues as a whole have continued to grow, albeit at lower rates. Furthermore, BST continues to gain market share because it has the strongest distribution network and largest number of products among lottery operators in Malaysia. We therefore believe that our sub-2% growth for FY4/10 is sufficiently conservative.
§ Dividend payout to remain above 75%. The company has reiterated its stated dividend policy of paying at least 75% of net profit. This is lower than the 90% actual payout in FY08 because the company has not yet refinanced its remaining RM330m term loan. This is repayable at a rate of RM125m pa, or 30% of our net profit forecast. Once the loan is repaid, or if it is refinanced into a more permanent debt structure, the payout could return to 100%. Note that our dividend forecast is gross for FY08–09 and net for FY10–11 because BST is transitioning to a single-tier tax system. This will realistically happen either at the 2Q09 or 3Q09 interim dividend.
Earnings revision
§ We raise FY4/09 EPS by 5% given our new expectation of a flat instead of declining number of draws. We raise FY4/10–11 EPS by 1% also for a flat number of draws. The lower upgrade vs FY4/09 is because we incorporate our assumption of a GDP slowdown from 5.2% to 1% in CY09.
Price catalyst
§ 12-month price target: RM6.00 based on a DDM methodology.
§ Catalyst: Revenue growth could surprise in 2Q-4Q.
Action and recommendation
§ Outperform maintained. Due to our higher forecasts, we raise our target price from RM5.80 to RM6.00 or an implied target PER of 17.6x calendarised 2009E earnings. Our DDM assumes a 100% payout ratio from FY10.
§ BST has highly defensive underlying revenue growth of 6–8% pa, strong cashflow, decent net yield of 7–8% and will be attractive to investors seeking shelter from volatility.
Assume trading at current PE = 15x; EPS=29sen, payout 75%= 22sen. if single tier dividend(yield= 5%): or 29sen if gross (yield =7%). Although BST have recession proof business model, but it still lack of catalyst growth and highly depend on luck factor and consumer disposal income. Compared with other similar peer, eg. tanjong, BST appear stretch premium and fully value.
In this current bearish market, a lot of more attractive stock readily for us to bottom fishing.
I suspect are AIG (0.8%)and Goldman Sach (0.91%), both trying hard to dispose their equity stake at no cost to channel back to their homeland! As Hektar is tightly held by top 30 shareholder 98.91%, with 2 major shareholder hold 39.5% and 31.1% for Hektar Premier/Hektar Black and Fraser Centerpoint Trust, respectively. Because of most other shareholder are institute/unit trust, they are in trouble to meet redemption and portfolio adjustment, buying momentum is lacking at this moment. I believe downward pressure will ease as long as those foreign investor fully liquidate their stake. I'm aiming for long term investment. Hektar pay dividend quarterly, so long stay invested in hektar, will likely received dividend income regularly and thus reduce holding cost.
25 comments:
Bought TM at 2.56-2.60 to average down holding price. May consider hold little longer!
I am watching TM closely, might enter for swing place.
In time of bearish market, Resort stand up as gainer, perhaps due to its recession proof and captive business models and people rushing to path their money in safe stock with cash-rich and strong cash flow. It good to pick resort in weakness and sell strength
JP morgan expected rate cut, when Bank negara hold meeting on 24Nov to reflect a combination of slowing external and domestic demand, while inflation is easing. Crude oil dip to US55, our petrol likely to go down to RM1.92 by end of this month. I wonder what is the impact on CPO price? whether CPO could hold its floor price of RM 1400-1500 still in doubt
totally agreed with that. during recession, companys that having proven resilient is definitely on the chase. one should only picks this type of stock, if get stuck with them, you have sound sleep without worry, you know these company will never loss in longer term.
Some news from TNB :-
Make loss if coal exceeds US$120? - Chief executive officer Datuk Seri Che Khalib Mohamad Noh says Tenaga may continue to make losses if coal prices exceed US$120 a tonne. He was speaking at the International Energy Security Forum in Kuala Lumpur yesterday.
§ Average US$116 a tonne till December - He added that Tenaga has secured coal supply till next December but has not locked in coal prices because most suppliers are demanding for index-linked price (i.e. pricing at prevailing price at point of delivery). He said Tenaga has secured coal requirement for September to December this year at average price of US$116 per tonne.
§ We find the statements interesting - Contrary to management's guidance, according to our numbers, Tenaga would only make losses if average coal cost is over US$140 a tonne. On coal costs, compared to average price of US$114 a tonne for September-November provided last month, that means Tenaga may have secured another month of supplies since at above US$120 a tonne when spot coal prices was exchanging at US$100 average in the last four weeks.
§ Poor 1QFY08E earnings outlook? - In addition, Tenaga hinted that with coal prices still high, its 1QFY08E results may only break even or post marginal profit. The outlook appears to be below consensus.
§ Pressure mounts - Overall, we believe the seemingly negative statements were made in response to pressure from consumer and manufacturing groups to reduce electricity tariffs and as part of its effort to lobby for a tariff hike.
hng, Writeup for SIME :-
· CPO price recovery likely much further out. China's stimulus package, and Malaysia's replanting incentives and bio-diesel targets will help stem further steep drops in CPO prices. However, catalyst for a strong CPO price recovery in our view looks to be further out with the global economies falling into deeper recession and JPM's expectation of a mild overall 2009 recovery. A reversal in the rising inventory levels in Malaysia is required for us to start to turn bullish on the sector again. Nevertheless, the just released Oct-08 data continued to show a 7% M/M rise in inventory levels to 2.09MT, surpassing the previous peak of 2.03MT in Jun-08. We cut our 2009-10E CPO forecast from M$2,200/t to M$1,580/t (see separate Malaysian Plantations note for details).
· Forecast cut: The lowered CPO assumptions translate to a cut in Sime's earnings by 20% for FY09E and 29% for FY10E. The smaller cut in FY09E is because Sime had sold forward 25-30% of its palm oil volumes this financial year at a higher average price of M$2,900/t.
· Balance sheet strength: We estimate Sime Darby to remain in a net cash position with positive FCF even if CPO prices were to fall to M$1,000/t in FY09E. All of the group's debts are denominated in Ringgit. Of the group's long-term debts, 60% are due within the next 24 months, with the remaining due largely in 2011/2012.
· Downgrade from Neutral to UW: We cut our Jun-09 PT for Sime from M$7.30 to M$5.80 based on sum-of-parts and valuing the plantation business at 14x FY09E. Sime has out performed its peers and the market in the past 1 and 3 months by 4% and 9% respectively. Special dividends in FY08 we believe are unlikely to recur in FY09 in view of weaker earnings. Risk - sharper and faster than expected CPO price recovery.
Just sold partial today TM at 2.83 to realize profit, aim for higher profit now!
Ha!, fear of another dip prompted me to sold off today and yesterday TM to realize all profit at 2.80-2.82. Better be prudent in this volatile market
If CPO fall to 1300-1400, what would be profit margin for planter even with reduce fertilizer cost? CPO and crude oil still have close correlation, if crude oil fall US50-60, CPO likely to trade below RM1500.
Compared with CPO, crude oil have ability to cut production without incur high stockpile problem. To cut CPO production, cooperation among planter like IOI corp, KLK and asiatic are needed to delay or abolished their plan to expand palmoil landbank in indonesia. To increase domestic consumption, more health awarness through education/advertisment to further introduce the benefit of refine palmoil as a better cooking oil, enrich with natural Vit E and improved R&D for better quality to narrow price gap with other soyaoil, corn oil, sunflower oil etc. Therefore, if palm oil is more widely used, the fall might not be that sharp as the stock level can be reduced to a much more comfortable level.
Part of the TM share rebounded this afternnon is because of management reaffirmed dividend policy, which was miss yesterday during teleconference with analyst.
Bought more Hektar at 83-83.5sen to increase REITs portfolio for steady income yield.
Europe market show sign of relief, Asian market also off of their low. All eye focus on US market as 15 Nov is dealine for last date redemption of hedge fund.
US market swing wildly from as low as 7900 to as high as 8900! Low volume and herb sentiment drive market extreme volatile.
BERJAYA SPORTS TOTO
Defensive and strong cashflow
Event
§ We re-examine BST's prospects following a conversation with management.
Impact
§ Revenue growth trends remain strong, driven by jackpots. 1Q FY4/09 revenue growth of 9% YoY was even stronger on an underlying basis, as revenue per draw grew 15% YoY. We now expect a flat number of draws for FY4/09 as a whole, meaning that in 2H FY4/09, we could be looking at a 5% HoH growth from the number of draws alone. This in turn means that our full-year revenue growth forecast of 9% may still be conservative. Additionally, the jackpots have grown so quickly that non-4D revenue now accounts for 30% of revenue, up from 25% previously. This could boost EBIT margin by 20–30bp.
§ Defensive revenue stream going into GDP slowdown. Historically, even in severe recessions, lottery revenues as a whole have continued to grow, albeit at lower rates. Furthermore, BST continues to gain market share because it has the strongest distribution network and largest number of products among lottery operators in Malaysia. We therefore believe that our sub-2% growth for FY4/10 is sufficiently conservative.
§ Dividend payout to remain above 75%. The company has reiterated its stated dividend policy of paying at least 75% of net profit. This is lower than the 90% actual payout in FY08 because the company has not yet refinanced its remaining RM330m term loan. This is repayable at a rate of RM125m pa, or 30% of our net profit forecast. Once the loan is repaid, or if it is refinanced into a more permanent debt structure, the payout could return to 100%. Note that our dividend forecast is gross for FY08–09 and net for FY10–11 because BST is transitioning to a single-tier tax system. This will realistically happen either at the 2Q09 or 3Q09 interim dividend.
Earnings revision
§ We raise FY4/09 EPS by 5% given our new expectation of a flat instead of declining number of draws. We raise FY4/10–11 EPS by 1% also for a flat number of draws. The lower upgrade vs FY4/09 is because we incorporate our assumption of a GDP slowdown from 5.2% to 1% in CY09.
Price catalyst
§ 12-month price target: RM6.00 based on a DDM methodology.
§ Catalyst: Revenue growth could surprise in 2Q-4Q.
Action and recommendation
§ Outperform maintained. Due to our higher forecasts, we raise our target price from RM5.80 to RM6.00 or an implied target PER of 17.6x calendarised 2009E earnings. Our DDM assumes a 100% payout ratio from FY10.
§ BST has highly defensive underlying revenue growth of 6–8% pa, strong cashflow, decent net yield of 7–8% and will be attractive to investors seeking shelter from volatility.
Assume trading at current PE = 15x; EPS=29sen, payout 75%= 22sen. if single tier dividend(yield= 5%): or 29sen if gross (yield =7%). Although BST have recession proof business model, but it still lack of catalyst growth and highly depend on luck factor and consumer disposal income. Compared with other similar peer, eg. tanjong, BST appear stretch premium and fully value.
In this current bearish market, a lot of more attractive stock readily for us to bottom fishing.
No trading today, enough for this week. Prepare for next week battle.
me too, no trading. get ready for next week as well.
second liner shares is being bashed down, more down side expected. stay sideway.
No trading today, market lack of momentum and volume. Japan follow Europe enter into recession. Be patients and wait for oppurtunity to come.
zero trade as well.
http://www.cnbc.com/id/27719011/
Bought Hektar at 80 sen. Will keep accumulating hektar on weakness for its sustaintable and consistency in dividend payout.
selling forces on Hektar is very high, wonder who is disposing..?
I suspect are AIG (0.8%)and Goldman Sach (0.91%), both trying hard to dispose their equity stake at no cost to channel back to their homeland! As Hektar is tightly held by top 30 shareholder 98.91%, with 2 major shareholder hold 39.5% and 31.1% for Hektar Premier/Hektar Black and Fraser Centerpoint Trust, respectively. Because of most other shareholder are institute/unit trust, they are in trouble to meet redemption and portfolio adjustment, buying momentum is lacking at this moment. I believe downward pressure will ease as long as those foreign investor fully liquidate their stake. I'm aiming for long term investment. Hektar pay dividend quarterly, so long stay invested in hektar, will likely received dividend income regularly and thus reduce holding cost.
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