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BREADTALK, CHINA ZAINO, INDOAGRI: What analysts say now...
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Monday, 17 August 2009 18:00
Excerpts from latest analyst reports….


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Source: Kim Eng report Aug 14.
 
Kim Eng raises target price for BreadTalk to 77 cents

Kim Eng Securities (analyst – Pauline Lee): BreadTalk achieved a 2Q09 net profit of $3.35m (+2% yoy, +54% qoq), above our expectations.

Positive earnings surprises came from an improvement in operating margins, as well as strong contributions from its franchising activities.
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George Quek, the founder of BreadTalk. Photo by Smart Investor.

We have raised our FY09 and FY10 earnings estimates by 20-30% to factor in the good results and improving margins. Our SOTP (Sum of the Parts) target price is increased to $0.77.

BreadTalk has once again proven its defensive attributes, thanks to its niche in providing consumer staples. Its good exposure to fast-growing Asian markets has yet to be reflected in the price. Maintain BUY.


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Bank of China Int’l reaffirms ‘buy’ rating on China Zaino


BOC International Holdings Limited, which specializes in investment banking, is a wholly owned subsidiary of Bank of China.

BOCI (analyst – Frank Lai): Net profit for 1H09 fell below expectations due largely to lower than expected revenue and margins. Revenue in 1H09 increased 5% YoY to Rmb1.10bn while netmargin narrowed to 15.6%, from 20.3% in 1H08.

Key Risks to Rating:

* The potential recovery in local consumer spending may not be as strong as expected.

* Growth of luggage products may not be as strong as expected.

Valuation:

* We cut our earnings forecasts for 2009-11 by 8-10% on more conservative margin and revenue growth assumptions.

We believe Zaino remains undervalued, trading at a 2010 P/E of 3.7x, a 2010 EV/EBIT of 0.9x and a 2009 yield of 5.5%. As Zaino is expected to generate returns of equity (ROE) similar to those of its peers in the next two years, we contend that the company deserves a prospective P/E of4.0x, with reference to the valuations of its peers.

This translates to a target price of S$0.32 based on 2010 forecast earnings, implying an upside of about 25% from the current level. As such, we reaffirm our BUY call on the stock.


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Source: Credit Suisse report Aug 14.

Credit Suisse sharply raises target for IndoAgri to $2.45

Credit Suisse (analyst - Teddy Oetomo): Indofood Agri Resources (IFAR) reported sterling 1H09A performance. Excluding biological asset revaluations, 1H09E net income came at Rp645 bn, 65% of our old FY09E forecasts and 59% of consensus’ forecasts.

We believe that IFAR’s valuation remains attractive. IFAR is currently trading at a 29% discount to PT Astra Agro Lestari Tbk (AALI).

IFAR is trading at the second lowest 2010E P/E of all Indonesian CPO counters under our coverage and is trading at wider than historical average discount to AALI based on 12 months forward P/E. IFAR is also trading at the midpoint of its historical trading range.

We maintain our OUTPERFORM rating on IFAR and we increase our target price from SG$1.15 to SG$2.45 due to:

1) the increase in our earnings estimates,
2) roll over of our target price to be based on 16x 2010E P/E and
3) stronger IDR relative to SGD (as IFAR’s earnings are quoted in rupiah while its share price is quoted in SGD).
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