Business

Brokers' take

Compiled by Stephanie Luo,

The Business Times

PACC OFFSHORE SERVICES HOLDINGS | HOLD
TARGET PRICE: $0.335
APRIL 12 CLOSE: $0.35

OCBC INVESTMENT RESEARCH, APRIL 12

It has been a tough time for offshore and marine companies since the oil price crash in the third quarter of 2014.

PACC Offshore Services Holdings is still in a relatively better position, with positive operating cashflows of US$38.2 million (S$53.5 million) in FY16 and US$69.6 million in FY15.

Net gearing was 1.0x in FY16, but the group has been enjoying good relations with its banks. As at Dec 31, it had undrawn bank lines of about US$282.9 million.

Meanwhile, the group has been able to secure contracts for its vessels from the Middle East, which is still holding up for now.

OVERSEA-CHINESE BANKING CORPORATION | BUY
TARGET PRICE: $10.75
APRIL 12 CLOSE: $9.70

UOB KAY HIAN RESEARCH, APRIL 12

We expect OCBC to achieve net profit of $805 million for the first quarter of this year - down 6 per cent year-on-year, but up 2 per cent quarter-on-quarter.

We see growth from fee income, driven by wealth management, and higher but normalised contribution from Great Eastern. Unfortunately, asset quality for the oil & gas sector remains stressed, and we expect credit costs to stay elevated.

We expect fees & commissions to have expanded 16.2 per cent year-on-year to $434 million, driven by wealth management.

OCBC completed the acquisition of Barclays' wealth management business on Nov 16 and benefited from growth in bancassurance.

We also expect healthy contributions from loan-related fees. We expect net trading income of $120 million.

TECKWAH INDUSTRIAL CORP LTD | NON-RATED
APRIL 12 CLOSE: $0.54

CIMB RESEARCH, APRIL 11

Teckwah has transformed into a supply chain service provider.

Its non-print (logistics) segment formed 65 per cent of FY16 group Ebit (earnings before interest & tax).

Group core Ebit hit new highs at $17.2 million in FY15 and $19.1 million in FY16, as compared to $12.3 million to $14.9 million in FY11-14.

Management attributed the improving profitability to several initiatives that Teckwah undertook during FY11-14, including investing in its new headquarters and a print media hub; relocating its high-volume print and package activities to its new factory; and upgrading its overseas facilities.

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.