Compiled by Anita Gabriel
PACC OFFSHORE SERVICES HOLDINGS | BUY
TARGET PRICE: $0.41
NOV 14 CLOSE: $0.325
DBS Group Research, Nov 14
Q3 earnings came in below expectations given the combination of start-up costs for the POSH Arcadia, higher-than anticipated operating expenditure for other idle accommodation vessels, and late commencement of contracts of some of the offshore support vessels (OSV) on long-term contracts in the Middle East.
OSV day rates declined slightly during the quarter, though going forward, we see limited downside to rates as the offshore industry recovers.
In the near term, we see a stronger Q4 as the POSH Arcadia gets a full quarter of utilisation and more of the Middle East OSVs are deployed.
We continue to see POSH as a name to ride the gradual offshore service sector upturn; its share price has historically been strongly correlated with oil prices, which are rising again.
Further, POSH has no bonds outstanding and remains a privatisation candidate with Kuok (Singapore) Ltd as the majority shareholder (81.89 per cent ownership).
FIRST RESOURCES | NEUTRAL
TARGET PRICE: $2.13
NOV 14 CLOSE: $1.93
RHB Research, Nov 14
As expected, First Resources' Q3 2017 earnings shrank quarter-on-quarter, falling 57 per cent mainly due to lower product prices.
Nevertheless, lower unit costs helped to buffer earnings, on the back of a still strong fresh fruit bunches (FFB) output growth of 19 per cent (versus our forecast of 17.4 per cent and management's guidance of 15 per cent) in the nine-month period.
Despite the strong year-to-date output, we maintain our FFB growth forecast as we expect growth to continue moderating in Q4. We raise our earnings forecast for FY17-FY19 by 7-9 per cent to impute lower unit costs.
Our forecasts are now 6-19 per cent above consensus. Our target price is lifted to $2.13 from $2.00 based on an unchanged 2018 forecast target of 13 times price earnings in line with historical averages.
WILMAR INTERNATIONAL | HOLD
FAIR VALUE: $3.51 (EASED FROM $3.66)
NOV 14 CLOSE: $3.19
OCBC Research, Nov 14
Results were within expectations.
Wilmar reported a 0.4 per cent year-on-year (YoY) rise in revenue to US$11.1 billion in the third quarter 2017, supported by increased sales from Oilseeds & Grains. Net profit fell 5.7 per cent YoY to US$370 million while core net profit decreased 15.9 per cent to US$323.7m in third quarter.
Nine-month revenue and net profit accounted for 74 per cent and 70 per cent of our full year estimates, respectively.
The good performance in oilseeds & grains and strong contributions from associates were offset by weaker results in the tropical oils and sugar businesses. Performance of the other major business segments is expected to be "satisfactory".
We tweak our estimates and roll over our valuations to FY18 earnings and our fair value eases from $3.66 to $3.51.
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