| UOB KAYHIAN |
OCBC |
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Alpha Picks: Hoping For A Strong Finish
Our alpha picks did relatively well, outperforming in 3Q18. We remove Wheelock as there was no revision to the offer price and ST Engineering has been added to reflect its recent accretive and strategic M&A.
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Yangzijiang Shipbuilding: What a run!
Having risen 38% since we reiterated our Buy on 8 Aug with our report, “All Aboard!”, the shares of Yangzijiang Shipbuilding (YZJ) are now trading close to our fair value estimate. The upward momentum of the stock has been strong, such that YZJ has appreciated close to 48% from its trough in mid Jul over a span of just two and a half months. While the momentum may continue in the near term, the upside potential for the stock is diminishing. We believe that current valuations are fair, considering the street is forecasting earnings growth of -3% for 2019, and ROE of ~9% for the next 12 months. We also note that there has also seemed to be a pause relating to the group’s share repurchases – YZJ had started share buy backs in end May and continued till mid Jul. The last repurchase was on 17 Jul for 2m shares at S$0.86/share. Meanwhile, we would monitor steel prices as well, which could weigh on margins. We tweak our estimates and our fair value estimate rises from S$1.23 to S$1.32, but due to the diminishing upside, we downgrade our rating to HOLD. |
| RHB | DBS VICKERS |
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Qian Hu Corporation
Expedition Series: Swimming With Fishes We visited Qian Hu’s new aquaculture business in Hainan, China in late August. Currently, its main revenue from aquaculture comes from rearing grouper fry and selling them at a healthy profit margin weeks later. It has an export licence in China, and is the only one in Hainan to obtain one. It currently importing marble goby, snapper and will look at expanding the range of fish to include varieties like pompano, etc. We estimate this business will need about six months to a year to scale up, and could be a potentially exciting new growth driver for the company. The last closing price of this unrated stock is SGD0.24.
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Hi-P International Trading on valuations Upgrade to BUY on attractive valuations.
Hi-P's share price has tumbled 46% YTD and 62% from its high of S$2.72 in March 2018. At current PE of 9.3x and 9.2x on FY18F and FY19x earnings respectively, Hi-P is trading at attractive valuations relatively to peers' 15x and 12x. From a longer-term perspective, it is also below its historical average on a forward PE and P/BV basis. Hence, we upgrade our recommendation to BUY from HOLD on valuation grounds.
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Check out our compilation of Target Prices
