Excerpts from analysts' reports

OSK-DMG's target for Stamford Land is 73 cents, a 30% discount to RNAV

Goh-Han-PengAnalyst: Goh Han Peng (left)

Stamford Land reported headline net profit of SGD27.1m for FY14, a decline of 14% yoy. Stripping out revaluation gains from its Perth office property in the prior year, we estimate core earnings growth of 20%.
 
Notwithstanding a weaker AUD, Stamford’s hotel division comprising 7 hotels in Australia and one in New Zealand, delivered a 6% rise in operating profit to SGD40.1m on the back of a recovery in its Adelaide hotels and higher occupancies.

Its property division reported higher turnover of SGD48m (+118% yoy) from sale at its Auckland project (Stamford Residences Auckland) and Sydney (Stamford Residences Reynell Terraces).

Taking advantage of a strong residential market in Sydney, Stamford Land has substantially sold its upcoming project Macquarie Park Village, a re-development of its North Ryde hotel property.
 
However, revenue and profit recognition will only commence in 2017 on completion. Meanwhile, the group has obtained development approvals for the redevelopment of its Sir Stamford Circular Quay hotel and Dulwich Hill property, and we expect these projects to be progressively launched over the course of the next 12 months.

The group maintained an unchanged payout of SGD 3 cents,translating to a dividend yield of 5%. We reiterate a BUY on the stock with a TP of SGD0.73, premised on a 30% discount to its RNAV of SGD1.04. 



CIMB picks Mermaid Maritime as preferred stock in small/midcap O&M space

Analyst: Yeo Zhi Bin

mermaid_chart5.14Mermaid Maritime stock (48 cents) trades at a trailing PE of 11 and dividend yield of 1.33%.
Chart: Bloomberg
2Q14 core net profit of US$4.8m (1.8x yoy higher) was marginally lower than our expected range of US$6-8m.

1H formed 23% of our FY14 and we are expecting a substantially stronger 2H. The negative variance stems from lower-than-expected gross margins for the subsea division and delayed contribution of the Murabak Supporter.

Nonetheless, propped up by Asia Offshore Drilling’s (AOD) contributions, FY14 represented Mermaid Maritime’s best 2Q since the heady days of FY07. 

We trim our FY14 by 2% to factor in the slight miss and our FY15-16 by 3-4% on lower margin expectations, resulting in a dip in our 7x CY15 EV/EBITDA-based target price (its 4-year mean).

Maintain Add with catalysts coming from earnings strength and more contracts. 

The time is now: accumulate aggressively 
Against the aggressive share price run-up and an expected seasonally weak 2Q, we recommend investors to wait until mid-May.

At 5x EV/EBITDA and 0.9x CY14 P/BV, Mermaid is the cheapest in our coverage and replaces Ezion as our preferred pick in the small/mid cap O&M overage. 

 

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