Friday, August 27, 2010

KrisAssets Holdings -s&p

KrisAssets Holdings
Recommendation: HOLD

Price: MYR3.22 12-Month Target Price: MYR3.40

Results Review & Earnings Outlook

· Kris’ 1H10 net profit jumped 89.9% YoY to MYR92.6 mln, exaggerated by a MYR50 mln fair value gain on investment property in relation to the Mid Valley Megamall. Stripping out the after-tax impact of the gain, the adjusted net profit of MYR55.5 mln is up 2.4% YoY and equivalent to 54.2% of our 2010 forecast. With 2H10 expense accruals expected to be seasonally higher, we consider the core earnings to be in line with our expectations.

· 2Q10 revenue of MYR60.2 mln was up 2.2% QoQ and 5.6% YoY, taking 1H10 revenues 4.9% higher to MYR119.1 mln as a result of higher rental incomes received. Gross margin for the period was slightly improved at 78.8% from 78.1% in 1H09.

· Kris’ balance sheet metrics remained solid with low net gearing of 23% at end-June from 25% at end-March. NAV rose to MYR3.56/share from MYR3.36 at end-2009.

· We lift our 2010 earnings estimate to MYR139.3 mln (from MYR102.3 mln) after factoring in the fair value gain and keep our 2011 forecast broadly unchanged. The Mid Valley Megamall remains a popular shopping destination, attracting strong visitor flows. The Mall continues to enjoy a 100% occupancy rate.

Recommendation & Investment Risks

· We maintain our Hold recommendation on Kris but raise our DCFbased 12-month target price to MYR3.40 (from MYR3.20), after rolling forward our calculations by a year.

· We continue to derive our target price using a discounted cash flow (DCF) approach, in view of Kris’ steady cash flow generation, but we have rolled forward our calculations by a year to 2011. Our model assumes a WACC of between 6.3% and 6.7% as well as a terminal growth rate of 1% (all unchanged).

· We believe the stock is close to being fully valued, as it trades at 2011 PER and P/B of 10.1x and 0.84x, respectively – valuations that remain within their respective three year trading bands. We understand management is actively seeking to acquire foreign shopping complexes to be injected into Kris to spur its future earnings growth, and we wait for such an acquisition to materialize before imputing any additional contributions. Parent IGB’s (IGB MK, MYR1.87, 3-STARS) potential future plans to inject its assets into a REIT could likely involve the Megamall. Nevertheless, it is premature, in our opinion, to assess the impact at this juncture until further clarity emerges.

· Risks to our recommendation and target price include an unexpected curtailment in retail consumer spending that could significantly affect retail sales and ultimately impact Kris’s rental income.

Fajarbaru Builder Group-kn

Fajarbaru Builder Group
BUY RM1.00
Target Price: RM1.51
52-week range: RM0.92-RM1. 24
Another stunning year in FY10

l FY10 net profit of RM24.7m came inline with our expectations and above consensus at 101% and 111%, respectively. The net profit jumped by 72% on the back of lower revenue by 10% mainly due to lower operating cost with higher EBITDA recorded at 19% as compared to the previous year at 10%. The favourable results were also supported by higher margin from the ongoing projects coupled by lower building material cost. It had also announced shares dividend of 1 treasury shares for every 20 existing shares.

YoY, net margin increased significantly on the back of bad debts recovered and lower operating cost. The higher net profit was mainly due to bad debts repayments and as well as favourable margins from the new projects ie: shrimp farm project in Terengganu, as its EBITDA surged from 19% to 24%. Nonetheless, the revenue was 10% lower due to less progressive billings in the quarter as most of the key projects were completed in FY09.

QoQ, revenue grew by 3% as slower recognition sales. The net profit jumped by 86% on the back of higher other income from debt repayments and 3% higher margin for the ongoing projects. The net margin is still at the favourable level at 13% which is improving since the 1Q10. We believe that is due to prudent measurements taken by the management in securing new projects without pressuring its profitability via low bid price.

One of the contenders for LRT extension project. Recall that Fajarbaru is one of the prequalified contractors for main and sub LRT extension projects and segmental box girder for LRT extension project; we understand that the project will be awarded in smaller packages which will increase the likelihood of smaller contractors like Fajarbaru to win some of the projects.

Current order book stood at c RM300m for next 2 years. We expect Fajarbaru to secure at least another RM200m worth of project during CY11 as we see that the favourable construction sector in 2011 will likely to benefit Fajarbaru.

Maintain BUY with higher TP of RM1.51 from RM1.32. We revised our FY11 earnings higher by 19% and introducing our FY12 earnings in our forecast. Our TP is based on 10x PE to FY11 EPS of 15.1 sen.

Tuesday, August 24, 2010

Sunway City -apex

Sunway City Bhd
Price (20 Aug 10) RM 3.73 Buy
TP: RM4.70

Solid 2QFY10 results with Big dividend of 31 sen

Sunway city posted a core net profit of RM 39.2mil for 2QFY10 (-6.4% q-o-q, +49.6% y-o-y) on the back of revenue totalling RM262.3 mil (-7.4% q-o-q, +14% y-o-y), mainly due to higher contributions from the property development and property investment segments. An interim dividend of 31 sen has been declared. Maintain Buy with a TP of RM 4.70 per share from RM4.62 previously.

Revenue -7.4% q-o-q to RM 262.3mil, mainly due to the completion and delivery of Sunway Giza in the preceding quarter.
Sunway City posted revenue of RM 262.3mil for 2QFY10, mainly contributed by the property development (-36.7% qo- q) and property investment segments (-6.8% q-o-q). The property development projects with significant contribution during the quarter were from Sunway SPK whilst Sunway Pyramid Shopping Mall remains the major contributor for the property investment segment. The overall revenue decrease was mitigated by growth in the leisure, hospitality and healthcare segments. On a cumulative basis, 1HFY10 revenue came in at RM 545.6mil(+11% y-o-y), driven by stronger performance from the property investment segment.

Net Profit came in at RM 39.2mil (-6.4% q-o-q)
Meanwhile, 2QFY10 core net profit declined by 6.4% q-o-q to RM 39.2mil from RM 41.9mil in the preceding quarter, mainly due to lower revenue. Net profit margin for the quarter under review stood at 14.9% vs 14.8% in the preceding quarter. On a cumulative basis, 1HFY10 core net profit came in at RM 81.2mil(+49% y-o-y) on better margins achieved during the period under review.

Sales of new property were RM285mil(+105%q-o-q)
Sales of new property during the quarter were RM 285mil as compared to RM 139mil in 1QFY10. This was mainly attributed improved consumer sentiment in property sector. Meanwhile, the group estimates FY2010 sales to be RM 1.0bil on the back of RM 1.76bil property launches and better consumer sentiment.

Unbilled sales of RM743mil
On the other hand, the group’s unbilled sales of RM743mil should help to underpin near term earnings visibility. Besides that, the group plans to increase its 2010 launches
target to RM 1.76bil from RM 1.5bil previously in order to sustain longer-term profits. Main launches include Sunway Velocity, Sunway South Quay Condo and Commercial area in Sunway Damansara.

Recent development
On 8 July 2010, the group completed the listing of the Sunway Real Estate Investment Trust ("Sunway REIT") on Bursa Malaysia Securities Berhad ("Listing"). In this regard, the group will receive cash proceeds of RM 1.2bil and hold 36.6% in the Sunway REIT. The listing exercise has reduced the group's gearing significantly and hence enabled the group to accelerate it's business expansion plans in the property development segment (local and overseas markets) as well as the property investment segment. While enjoying lower interest expense resulting from the reduced borrowings, the group also benefits from the share of profits from the Sunway REIT while receiving manager's fees for the management of Sunway REIT.

An interim dividend of 31 sen was declared for the current quarter.

Investment risks
Slower-than-expected recovery in global economy
Despite the worst of the recession is over, a slowerthan-expected recovery in global economy will adversely affect the group due to a possible slowdown in property demand.

Slower-than-expected progress billings, delays in launches and construction progress One of the main reasons for delays in launches and construction progress is unstable building material costs. Therefore, this risk is not significant in anticipation of steadier building material costs in coming quarters.

Competition from peers
Suncity is facing competition from its peers to attract buyers as the property sector is one of the most efficient and open sectors. We opine that Suncity can compete very well against its competitors with its strong brand name and high quality residential products.

Rising operating costs
The situation should be improved in anticipation of lower building material costs, especially with lower steel prices.

Maintain Buy with a TP of RM4.70 from RM4.62 previously
Based on the forecasted FY10 core EPS of 42.7 sen, we value the stock at RM4.70, which is derived from a blended valuation of 1x net asset value and 5-years average PER(adjusted) of 9.8x. We favour Sunway city due to its attractive valuation and defensive qualities.

China Taisan Technology - ke

China Taisan Technology
Background: China Taisan is one of the leading producers of knitted performance fabrics in China. It is mainly engaged in the knitting, dyeing and finishing of fabrics under its own Lianjie brand, as well as the provision of fabricprocessing services. Among its key endcustomers are strong domestic brand owners such as Metersbonwe, Li Ning and 361 Degree.

Industry outlook: The Guangzhou Asian Games, which will be held in November 2010, should continue to underpin rising demand for sportswear in China. In particular, the market for hi‐tech, multi‐functional fabrics is expected to grow from at a CAGR of 30.4% from RMB3.7b to RMB8.1b in 2011.

1H10 results review. Net profit surged by 192% yoy to RMB109.4m on the back of 72% growth in revenue to RMB605.3m. Notably, overall GPM expanded by 8.3ppt to 25.3% in 1H10, mainly due to 1) higher sales volume and ASP, 2) change in revenue mix to higher‐margin products, and 3) improved utilisation rate.

Proposed TDR listing. Based on a proposed ratio of each TDR to two ordinary shares, the company plans to issue 125m new shares and 125m vendor shares for the proposed TDR listing. We understand the net proceeds will be used to fund its capacity expansion, which is expected to complete by FY12.

Entry of reputable institutional investor. In May 2010, China Taisan placed out 30m new shares (representing 3.13% of enlarged share capital) at $0.195 a share to Atlantis Investment Management. We view this as a positive endorsement of management’s capabilities and future growth prospects.

Cheaper way to play consumption growth story in China. Management expects earnings momentum to slow down going into 3Q as the quarter is traditionally a lull period for the group. As of mid‐August 2010, its orderbook stood at RMB118m, which will be recognized within the next 2‐3 months. The stock currently trades at about 5x FY10 PER, based on Bloomberg estimates.

Sunway City-hwangdbsv

Sunway City
BUY RM3.73
Price Target : 12-month RM4.70

Lighter & Nimbler

• 2Q10 results within expectations; 31sen bumper interim DPS declared

• Sales on track to meet RM1bn target. Turning net cash post- REIT, may gear up for landbank replenishment.

• 2010-12F raised by 8-25% to factor in acceleration in launches and REIT impact.

• Maintain Buy and TP of RM4.70, based on 20% discount to RNAV of RM5.81.

Results in line with expectations. 2Q10 net profit ex-exceptionals came in at RM39m (+50% y-o-y, -6% q-o-q). Leisure and hospitality segments reported stronger EBIT y-o-y (school holidays & Middle East tourists, 4QFY09 affected by Influenza A (H1N1) outbreak), while property development saw q-o-q decline due to completion of Sunway Giza commercial project. Interim DPS of 31sen (4QFY09: 8 sen) with net yield of 6.2% (KLCI: 2.8%), to reward shareholders post-REIT listing.

Robust physical sales of RM285m (+239% y-o-y, +105% q-o-q), driven by Sunway Damansara Rymba Hills bungalows, Sunway SPK 3 Harmoni townhouses, Sunway Guanghao condos, and Sydney industrial lot sale. 1H10 sales of RM424m is on track to meet the RM1bn 2010 target. Riding on robust demand, launch target has been raised to RM1.76bn with RM800m slated for 2H10 including Sunway Velocity (maiden launch of shopoffices & serviced apartments), South Quay condos, and Sunway Damansara (SOHO, shopoffices). Unbilled sales stood at RM743m (2x FY09 annualised property development revenue).

Stronger balance sheet post-REIT. The listing of Sunway REIT has helped to unlock value and provide a ready avenue for SunCity to monetize more of its investment properties in the future. REIT net proceeds of ~RM500m (after minority interest and RM780m debt repayment) should come in handy for working capital and landbank replenishment. We raised 2010-12F earnings by 8-25% to factor in acceleration in project launches and REIT impact (annual REIT dividend & management fees along with interest savings should help offset lower property investment contribution). SunCity will also be recognizing RM530m one-off gain on disposal in 3Q10.

Sunway City-rhb

Sunway City
Share Price : RM3.73
Fair Value : RM5.20
Recom : Outperform (Maintained)
31 sen gross dividend to reward shareholders

♦ In line. Excluding the one-off fair value gain amounting to RM41.8m (RM32.4m net) arising from the completion of disposal of three parcels of leasehold land to Sunway Pyramid S/B, core net profit of RM39.3m came in within our expectations but below consensus estimates by 10.5%. Compared to 1Q10 core net profit of RM41.9m, contraction of 6.3% in 2Q10 core earnings was mainly dragged down by lower revenue from the property development division, due to the completion and delivery of Sunway Giza in 1Q10. To our surprise, Suncity declared an interim dividend of 31 sen, to commemorate the successful listing of Sunway REIT. Including our final dividend forecast of 5 sen, this year’s dividend yield may potentially surge to 9.7%.

♦ Targeted RM1.76bn worth of new launches. Key launches this year include: i) Sunway Velocity; ii) Sunway South Quay condo; and iii) Commercial area in Sunway Damansara. So far in 1H10, Suncity has launched RM966m worth of projects, generating new sales of RM424m, representing a take up of roughly 44%, exceeding internal sales target of RM411m. Going into 2H10, Suncity will launch the remaining RM798m worth of new projects. The upcoming Sunway Velocity has managed to attract 2,000 registrants. The project has a total GDV of RM1.5bn, located at Jalan Peel, Cheras. The first launch will consist of 112 units of office suites with 2 levels of retail lots on the ground floor, as well as 264 units of service apartments. Pricing is about RM450-500psf. As for the Tianjin, China project, Suncity will sign the equity JV agreement next month. The consortium partners include Keppel Land from Singapore, Shima from China, Mitsui Fudosan from Japan, Far Glory from Taiwan and etc. The Tianjin Eco-City project is worth a preliminary GDV of RM2.5bn.

♦ Debt free post-REIT listing. Following the successful listing of REIT, Suncity will become a net cash (about RM120m based on proforma) company, after utilisting part of the proceeds to pare down debt. This would give the company ample flexibility to gear up for big projects or landbank acquisitions.

♦ Forecasts. We adjust our balance sheet based on the proforma provided. Impact on net earnings is minimal, <1% drop from our previous forecasts.

♦ Risks. The risks include: 1) competition from peers; 2) delays in launches and approvals; 3) rising raw material prices; and 4) country risk.

♦ Investment case. Following the adjustments in our forecasts, our RNAV-based fair value is revised slightly to RM5.20, from RM5.33, based on an unchanged 15% discount. We maintain our Outperform rating on the stock.

Monday, August 23, 2010

Sunway City -ecm

Sunway City
Target Price: RM5.70
2QFY10 : Bumper dividend

• Above expectations
Sunway City reported net profit of RM71.7m in 2QFY10 or adjusted net profit of RM39.3m if revaluation gain is excluded. For 1HFY10, adjusted net profit came in at RM81.2m (excludes revaluation gain and deferred tax reversal) which achieved 48% and 45% of full-year house and consensus estimates respectively. However, we deem this set of results to exceed house expectations while inline with street as we expect 2HFY10 numbers to be stronger on the back of sustained property sales and seasonally
higher revenue from hospitality and leisure divisions.

• Bumper dividend came true
A bumper dividend finally came true after we highlighted its possibility in our A Big Pay Day report dated 10 May 2010. As Sunway REIT listing came to fruition, Sunway City declared an interim net DPS of 23.3 sen (gross 31 sen). We tweaked our full year net DPS expectation to 30 sen based on a 20% payout assumption. This implies a net yield of 8.0%. However, we expect this to normalise to 2-3% in the following years.

• Property sales on uptrend
1HFY10 adjusted net profit increased 49.2% y-o-y with property development and property investment divisions the main contributors. A pleasant surprise this quarter was strong numbers from the hospitality and leisure divisions despite 2Q being a typically weaker quarter in terms of visitorship. During the quarter, Sunway City has achieved RM285m property sales (1Q10: RM139m) which was the strongest over last 9 consecutive quarters. Unbilled sales edged higher q-o-q from RM630m to RM743m. Amid strong take-up rates for recent launches, Sunway City will be stepping up its launches in 2HFY10. These launches will have GDV of RM798m which will bring full year planned launches to RM1.76bn from RM1.47bn previously. Sales target remains unchanged at RM1bn.

• Reiterate BUY
We revised FY10-FY12 earnings estimates by +6.4%, +9.0% and +6.3% respectively. Sunway City is undervalued as it currently trades at 41% discount to RNAV of RM6.36. The company is expected to have net cash of RM1.08 per share by end FY10. With its 36.6% stake in Sunway REIT making up another RM3.45 per share, this implies investors are virtually ascribing no value to its development landbank. We raised our TP to RM5.70 (from RM5.00) as we ascribe 14x P/E to mid CY11 earnings. This is justifiable given its 21.2% EPS CAGR over the next 3 years.

Suncity RNVA
Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo

There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
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