Excerpts from latest analyst reports......

NRA Capital upgrades SUNMART to 'overweight'; 21.5 cent target

Analyst: Lee Khai Chian

Sunmart's sprawling production complex. NextInsight file photo.

We keep our previous earnings forecast, as fundamentals remain largely unchanged. The company continues to see new enquiries from potential customers and rising outstanding sales order.

Growth, however, could be restrained by lack of capital to finance working capital requirement.

We upgrade our rating in view of improved risk/reward ratio.

The share price almost halved from its peak of $0.26 recorded in January following a combination of factors including negative responses to first KDR by Gaoxian, and postponement of its KDR listing. Accordingly, FY10 P/E and EV/EBITDA dropped to an attractive level, which are 6.0x and 3.6x respectively.

Our target price of 21.5 cents (previous 22) is based on 8x FY11 PER, a standard deviation above its historical multiples since 2009. Our TP is also backed by about 1x P/NTA.

Recent story:SUNMART's Q&A with investors, gets nod for Korea listing

Nomura says its earnings expectations, target price for NOL has 'downward bias'


Nomura International, in a report, said it was disappointed with NOL's 1Q11 US$10 mn net loss as it had expected marginal profit.

While logistic remains stable, container reported US$8 mn operating loss (due to higher costs, especially bunker oil prices).

However, as NOL share price has corrected from its year-to-date high, Nomura analysts Andrew Lee and Cecilia Chan said they believed the disappointing result is in the price.

"More importantly, we estimate the container recovery is in sight from 2H11 onwards driven by peak season and tighter supply, enabling carriers to push through rate increases and collect higher bunker surcharges."

It added there is a "downward bias" to its earnings expectations and price target for NOL. Currently, its price target and rating are S$2.60 and BUY, respectively.


DMG lowers C&O PHARMACEUTICAL target price to 45 cents

Analysts: Lynette Tan & Terence Wong CFA

Revenue growth flat YoY, at 3.1% to HK$170.9m, which was below our expectations.

However, higher administrative expenses resulted in PATMI declining 19.2% to HK$33.6m. The Chinese government’s recent price drop announcements have created some uncertainty amongst customers of companies that sell generic drugs.

Despite that, management is optimistic that its ASPs will remain stable as the prices of its drugs are generally already below the new price ceilings.

As a result of the weaker than expected growth in 9MFY11, we have lowered our earnings estimates by 14% to HK$155.5m for FY11 and by 16% to HK$177.9m for FY12.

Based on 10x FY11/12 earnings, we derive a TP of S$0.45 (previously S$0.62).


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